Sainsbury's Lucky Escape
It's always heartbreaking to see the apple of your eye run off with another suitor.
J Sainsbury Plc appears to have lost out on the chance to acquire Nisa Retail Ltd. after the wholesaler began exclusive talks with rival Co-Operative Group. It's a lucky escape for the supermarket chain.
With M&A sweeping the industry, Britain's big grocers have been busy bulking up. Nisa would have added some useful buying scale, especially after Tesco Plc's 3.5 billion-pound ($4.5 billion) purchase of Booker Group Plc. With that deal turning the business of supplying Britain's smaller retailers into a key battleground, Sainsbury would have got a piece of the action.
But the benefits just were never worth the risk.
Sainsbury's ardor had already cooled somewhat: the two sides suspended talks a couple of weeks ago, according to the Guardian. That came after rival Wm Morrison Supermarkets Plc won Nisa's contract to supply convenience-store operator McColl's Retail Group Plc, a deal that accounted for a third of Nisa's 1.25 billion pounds of annual sales.
What's more, the deal, even at a tiny 130 million pounds, might have created messy antitrust concerns. It could also have distracted Sainsbury from the job of integrating Argos. Despite some skepticism about the 1.3 billion-pound purchase, not least from me, the supermarket seems to be making a pretty good fist of it. Just this week, the company said it would start offering the Argos click-and-collect service from its convenience stores.
Sainsbury shouldn't be distracted from defending its core supermarket business either. With no let-up in the German discounters' assault on the U.K., and with Amazon.com Inc. emboldened by its purchase of Whole Foods Market, it already has plenty on its plate.
This is one break-up Sainsbury ought to get over easily.
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