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Sainsbury's Has A Lucky Escape From Wholesale Distraction: Gadfly

Published on Aug 30 2017 2:30 PM in Retail tagged: Trending Posts / Sainsburys / Argos / Nisa

Sainsbury's Has A Lucky Escape From Wholesale Distraction: Gadfly

It's always heartbreaking to see the apple of your eye run off with another suitor.

Sainsbury's appears to have lost out on the chance to acquire Nisa Retail after the wholesaler began exclusive talks with rival the 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's 3.5 billion-pound ($4.5 billion) purchase of Booker Group. 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.

Potential 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 Morrisons won Nisa's contract to supply convenience-store operator McColl's Retail Group, a deal that accounted for a third of Nisa's £1.25 billion of annual sales.

What's more, the deal, even at a tiny £130 million, might have created messy antitrust concerns. It could also have distracted Sainsbury's from the job of integrating Argos. Despite some skepticism about the £1.3 billion purchase, 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 UK, and with Amazon 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.

News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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