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Sainsbury’s Shares Hit By Asda

Sainsbury’s Shares Hit By AsdaSainsbury had requested for an 11-day extension which was declined by CMA (the competition and markets authority). This has raised fears that this £15 bn deal may get rejected once the final ruling is given by the regulator in the year 2019. It is also said that this takeover would create the biggest group of a supermarket in Britain which will also overtake Tesco. The CMA is investigating if this deal would push the prices on another level harming the competition.

This 11 business day’s extension request was put up to the CMA by Sainsbury in order to complete their responses. They mentioned that this rejection would not only affect their ability to provide a strong response but would also affect their hearing. Sainsbury and Asda also said that they had made several requests for extra time after the CMA has asked them to provide some extra information at a very short notice.

The CMA, however, explains that the supermarket groups had time since April to put up their views and they mentioned that they had a legal obligation to complete the investigation so that the final ruling is given on March 5, 2019. The CMA also stated that giving extra time to the group will also put them in “serious risk” as they won’t have enough time to finish the inquiry.

Neil Wilson says that he is not sure how the competition and markets authority is allowing this merger deal as Sainsbury is trying to decrease by bringing the four supermarkets group to three. He also mentioned that this might affect the other supermarket groups and their profits as well.

The analyst also feels that the deal might not be doomed and may work well. He also said that the issue is just a glitch and it might get resolved.

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