LONDON (Reuters) - The new chairman of Sainsbury’s said on Wednesday the British supermarket group had been right to pursue a takeover of rival Asda having received the necessary legal advice that deal would get through the competition regulator.
Sainsbury’s and Walmart owned Asda agreed the 7.3 billion pound ($9.6 billion) deal in April 2018 when David Tyler was Sainsbury’s chairman. The deal was blocked by Britain’s competition regulator last week.
Tyler stepped down in March this year after nine and half years in the role and was succeeded by Martin Scicluna, who had joined the Sainsbury’s board five months earlier.
“I joined the board in November, the button had been pressed,” Scicluna told reporters at a media briefing for Sainsbury’s full year results.
“But I had looked at it in detail and, no, I do not think it was a misjudgment, I think it was absolutely the right decision to try and merge Sainsbury’s with Asda because I genuinely believe that there would have been huge benefits for our customers as well as shareholders,” he said.
“Unfortunately, the Competition and Markets Authority (CMA) thought otherwise.”
The CMA said the combination of the Britain’s second and third biggest supermarkets would mean higher prices and must be blocked. Sainsbury’s spent 46 million pounds on the failed deal.
Scicluna was asked if it was the job of the Sainsbury’s board to sniff the political wind and decide whether the deal was likely to get through the regulator.
“No, it’s our (the board’s) job to make sure that we have the right strategy and it was the right strategy. We then had to go through the CMA but frankly we don’t control the CMA,” he said.
The chairman said every shareholder he spoke to was “very supportive” of the deal.
“We didn’t just do it on a whim, we took expert advice and expert advice based on precedent meant that this deal was doable.”
Sainsbury’s Chief Executive Mike Coupe was asked if he felt the CMA’s decision was politically motivated.
“Hindsight is a wonderful thing ... the parameters that were used were outside any precedent, not just in the UK but within the world, so you can draw whatever conclusion you want.”
Reporting by James Davey; Editing by Edmund Blair