J Sainsbury plc (LON:SBRY) has shelved its plans to buy convenience store chain Nisa over worries about how the UK competition watchdog was assessing rival Tesco’s takeover of Booker.
The supermarket halted exclusive talks on its proposed £130mln takeover last week after the Competition and Markets Authority voiced concerns about Tesco’s £3.7bn merger with grocery wholesaler Booker.
“Sainsbury’s has decided to pause discussions with Nisa until it better understands how the CMA would review any deal,” a source told The Guardian.
The CMA said Tesco’s planned Booker merger could hurt competition in 350 neighbourhoods. It has launched an in-depth investigation into the deal and the findings are expected in October.
Nisa’s chairman, Peter Hartley, wrote to the group’s owner members yesterday saying that Sainsbury’s is still interested in a deal but the company is awaiting further clarity on regulation and competition considerations.
However, it is understood that Nisa has reopened talks with the Co-operative Group, which has previously approached the firm.
Hartley said “another party” that had previously submitted a bid for Nisa has reaffirmed its interest in making an offer and the group is in discussions with them.
“The board of Nisa continues to review any serious incoming queries and offers in the best interest of its members,” he said.
Earlier this month, Nisa lost its contract with convenience chain McColls to Morrisons. The McColls contract accounted for about 35% of Nisa’s sales.
An insider said the Sainbury’s had not made its deal conditional on Nisa renewing its McColl’s contract. Both sides argued that while it made up a large proportion of sales, the contract was not a major profit driver.