Sainsbury’s (LON:SBRY) talks of a £130 million takeover of convenience chain Nisa has been put on hold over competition concerns.
The talks ground to a halt until the Competition and Markets Authority have reviewed Tesco’s £3.7 billion takeover of the wholesaler Booker, which is expected in October.
“Sainsbury’s has decided to pause discussions with Nisa until it better understands how the CMA would review any deal” a source confirmed.
The competition and Markets Authority have said Tesco’s merger with Booker could potentially damage competition in as many as 350 neighbourhoods. The watchdog suggested no clear distinction between chains owned directly by Tesco and the Budgens, Londis and Premier outlets.
Rival retail chains have lobbied the watchdog to show that Booker and Tesco, who already has a 28 percent share of the UK grocery market, have an influence over their convenience stores, which will only be increased with the completion of the deal.
In a message to Nisa members, Nisa chairman Peter Hartley said: “Sainsbury’s have made it clear they remain interested in continuing to work with Nisa and potentially making an offer for the company, but they have informed us that they do not feel sufficiently comfortable to do so until they have greater clarity over the evolving regulatory and competition considerations”
“The Board of Nisa continues to review any serious incoming queries and offers in the best interest of its Members, and against the shifting backdrop of the convenience sector,”
70 percent of Nisa members of Nisa must be in favour for any deal to go ahead. Many have expressed disquiet over the potential Sainsbury’s deal as they believe the deal has the potential to diminish their independence and control over their supply chain.
It could be that Sainsbury’s has read the runes that the membership is not happy about that transaction. They would rather remain a mutual.” said an industry source.
Both Nisa and Sainsbury’s have yet to comment.