Why the Sainsbury’s and Asda merger fell apart in 2019

Walmart’s proposed shares carried different voting power

Sainsbury’s and Walmart announced the combination on 30 April 2018. Sainsbury’s would acquire Asda and Walmart would receive shares equal to 42% of the combined company’s equity, with 29.9% of voting shares and the right to appoint two non-executive directors. Those are separate measures of financial ownership and voting control. Source 1

Why there were two supermarket counts

The authority considered both the terms shoppers experienced nationally and features the companies could vary at individual stores. The national supermarket conclusion covered 1,239 areas with either party present. The 537 count refers to the separate local effects finding where both had a presence. The smaller count cannot be read as a subset of stores by subtracting it from the larger count. Source 1

Delivery and fuel had different customer geographies

The local delivery finding for Asda customers covered 143 delivery areas served by both companies, half Asda’s delivery footprint as measured by the CMA. The local fuel finding concerned 127 areas with filling stations of both parties. Neither count translates directly into a number of households or the size of a predicted price increase. Source 1

The sale package could not resolve the case

The parties proposed divesting around 125 to 150 supermarkets and potentially some convenience stores and filling stations. The regulator concluded that the package did not address the scale and nature of the final findings across channels. It issued its final report on 25 April 2019 and made the prohibition order on 9 July. Source 1 Source 2

Sources

• CMA final report executive summary
• CMA inquiry and final order chronology