Sainsbury's: makes commitments for merger with Asda
(CercleFinance.com) - British supermarket group Sainsbury's and its smaller rival Asda have made several commitments after Britain's CMA competition watchdog identified competition issues relating to their planned merger.
The retailers said they plan to decrease prices by 1 billion pounds per year by the third year after their merger, reducing prices by around 10% on everyday items.
Sainsbury's and Asda explained that their estimated 1.6 billion pounds cost savings should allow them to fund the price cuts, while also delivering 500 million pounds in net synergies.
As a reminder, the companies also target a low double-digit return on invested capital (ROIC) and double-digit EPS growth by the end of the second full financial year.
In short, Sainsbury's and Asda said they "strongly disagree" with the CMA's findings and encourage the antitrust authority to recognise that there is a "clear benefit" for consumers, with the deal set to cut living costs for millions of UK households.
Investors seemed to appreciate the news: Sainsbury's shares are up 3% in London today.
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