August 17, 2018
Business

Another Sainsbury’s shareholder says Asda deal “makes a lot of sense”

Another Sainsbury's shareholder has said that the proposed merger with Asda "makes a lot of sense".

Jason Doctor at Pzena Investment Management, which owns around three per cent of the supermarket's issued shares, told City A.M. it could benefit the Sainsbury's, Asda, and Argos brands.

"The deal itself really makes a lot of sense, it's good for the Sainsbury's franchise, Asda franchise, and Argos franchise" he said. "But from our perspective its really hard to make a final judgment on the deal until were further along in the CMA process."

His comments echo those of Leigh Himsworth, manager of Fidelity's UK Opportunities Fund which owns over two per cent of the supermarket.

He told City A.M. earlier this week that the deal would bring together "three of the better brands in the UK".

Meanwhile the Qatar Investment Authority, Sainsbury's largest shareholder, has already confirmed that it will support the deal.

Shares in Sainsbury's closed up 14.5 per cent on Monday, but have since fallen slightly as more questions are asked about the combination.

Yesterday City A.M. revealed that the chairs of two select committees were planning to write to the CMA asking the authority to take evidence from suppliers.

This morning the letter, from Rachel Reeves of the Business Energy and Industrial Strategy (BEIS) Committee and Neil Parish of the Environment Food and Rural Affairs (EFRA) Committee was published.

"This merger threatens customer choice, hands yet more power to mighty supermarket players and heaps more pressure on small and medium suppliers," said Reeves.

"The CMA needs to be a champion of consumers and it must look closely at the impact of this merger on the supply chain as well as the effect on competition in the supermarket sector”.

Neil Parish added: "The cost savings being promised through this merger must not come through squeezing those further down the supply chain."

Read more: How would a potential merger affect Asda and Sainsburys?

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