'The CMA’s relaxed attitude to the Tesco-Booker deal is also a factor. The CMA waved through the Tesco-Booker deal on the nod but the boards of Walmart and Sainsbury’s cannot expect the same laissez-faire approach for their proposed mega-merger. Booker is a wholesaler and that difference should not be ignored. Significant store divestments will be the minimum required by the regulator. But it’s hard to see how this one can work from the regulatory perspective.'The difference with Tesco was Sainsbos trying a merger with a direct competitor and taking the big 4 down to 3, which is often the key tipping point in national competition considerations. Coupe and co put all their eggs in one basket – you have to question what the plan is now and whether management will remain for long.
Where now for Sainsbury's and Asda?
Sainsbury's is the squeezed middle, losing market share to discounters and simultaneously losing out to more premium brands. The worry is it has no credible plan except this merger. Mike Coupe may have been singing ‘we’re in the money’, but to borrow another Ginger Rogers movie song of the time, he should really have been singing ‘I’m putting all my eggs in one basket’. Today we might pick 'The song is ended (but the melody lingers on)'. Key questions now face Coupe: does he stay on to fight this until the bitter or admit defeat now? Does he leave the company? It's been a tough time for Sainsbury's as Tesco and Morrison turned their respective supertankers around; the going was easier a few years ago and Sainsbury's has failed to keep pace. The acquisition of Argos was a good move, but that alone won't solve Sainsbury's problems. A thorough root and branch review is needed in the core grocery division. For Asda, the question I guess is who now makes a move? Walmart has made it pretty clear it wants out of the UK and it may well find some more suitable suitors than Sainsbury's. Amazon has long been talked up as a potential buyer of one of the big UK grocers; Asda could fit, although its currently a lot closer to Morrisons through a partnership agreement in the UK. If Amazon picked Asda, it might leave Morrisons out on a limb, although not nearly as much as Sainsbury's looks right now.