On 25 April 2019, the UK Competition and Markets Authority formally blocked the proposed merger between J Sainsbury plc and Asda Group Ltd. Both companies walked away the same day. The deal's primary architect, Sainsbury's CEO Mike Coupe, disclosed his retirement in January 2020 and left the company on 31 May 2020.
The two retailers had unveiled their plan on 30 April 2018. It valued Asda at roughly £7.3 billion. Walmart Inc., Asda's parent at the time, would have held 42% of the merged group, which would have overtaken Tesco to become the UK's largest supermarket by market share.
Mike Coupe was the visible face of the transaction. On the morning of the unveiling, a camera caught him humming and singing along to 'We're in the Money' from the 1933 musical 42nd Street while waiting for a television interview. The clip went viral. It framed the merger as a windfall for executives rather than a benefit for shoppers, a perception that dogged the deal throughout its regulatory review.
The Strategic Rationale Coupe Sold to Investors and the Public
Coupe argued the merger would let Sainsbury's and Asda cut prices by roughly 10% on many everyday items. The central claim: pooling the two supermarkets' buying power would generate cost savings that could be passed to consumers. The chains overlapped less in geographic coverage than two London-centric rivals would have. Sainsbury's was stronger in the south of England and among higher-income shoppers; Asda concentrated on the north and Midlands and served a more price-sensitive customer base. Coupe presented the deal as a way to compete with the discounters Aldi and Lidl, which had been taking market share from the traditional big four supermarkets.
The projected synergies were large. Coupe and his team estimated annual cost savings of at least £500 million within three years. They also argued that a unified business could invest more in e-commerce and logistics, areas where both chains had trailed Tesco and Ocado. The deal was structured as a merger of equals in rhetoric, though the financial terms gave Walmart a 42% stake and Sainsbury's shareholders the remainder.
Phase 1 and Phase 2: The CMA Investigation
The CMA referred the merger for an in-depth Phase 2 investigation in August 2018, two months after the deal became public. The regulator's initial Phase 1 review had already flagged competition concerns in local grocery markets and the supply chain. The Phase 2 investigation, led by a panel of independent experts, examined whether the merger would lead to higher prices, reduced quality, or less choice for shoppers. It also scrutinised the impact on suppliers, many of whom feared the merged group would have enough market power to squeeze their margins.
Provisional Findings and Rejected Remedies
In February 2019, the CMA published its provisional findings. The regulator stated that the merger could lead to higher prices and a worse shopping experience for millions of UK consumers. Its analysis focused on the significant overlap between Sainsbury's and Asda in hundreds of local areas where both operated large stores. In those areas, the merger would shrink the number of major supermarket choices from four to three, or in some cases from three to two. The CMA concluded that this reduction in competition would likely push prices up, not down, directly contradicting Coupe's central promise.
The CMA suggested remedies that would allow the merger to proceed only if the companies sold a large number of stores to a new entrant or existing competitor. The number of stores the CMA wanted divested was high, reportedly over 300. Sainsbury's and Asda argued the proposed remedy was unworkable. They said the divestment package was so large it would destroy the financial logic of the deal. The companies refused to accept the remedy, leaving the CMA with only two options: clear the merger unconditionally or block it outright.
The Final Block and Immediate Aftermath
The CMA issued its final report on 25 April 2019, blocking the merger outright. Sainsbury's and Asda formally abandoned the plan the same day. Sainsbury's share price fell sharply on the news, wiping out much of the gains that had accrued since the deal was first made public. The collapse was a significant defeat for Coupe personally. He had staked his reputation on the merger and spent over a year defending it in public hearings, investor calls, and media appearances. The 'We're in the Money' clip was replayed on news bulletins as a coda to the failure.
The End of Coupe's Tenure at Sainsbury's
Mike Coupe disclosed his retirement as CEO of Sainsbury's in January 2020 and stepped down on 31 May 2020. The timing, roughly eight months after the merger collapsed, made it hard to separate Coupe's departure from the failed deal. Sainsbury's board framed the retirement as a long-planned succession. Coupe had been CEO since 2014 and had overseen a period of steady if unspectacular performance before the Asda bid. But the merger failure was the defining event of his final years in charge, and it left the company without a clear strategic alternative to the growth story Coupe had sold.
The episode illustrates a recurring pattern in large retail mergers: executives promise price cuts that regulators calculate will not materialise, and the companies end up with nothing but a year of legal and advisory fees. The CMA's final report made clear that the promised price cuts were not credible because the merged company would have had no incentive to pass on cost savings once local competition was reduced. For Coupe, the cost was a damaged reputation and the early end of a CEO tenure that might otherwise have been remembered differently.
As of May 2024, Sainsbury's and Asda remain separate companies. Asda was later acquired by the Issa brothers and TDR Capital in a deal that completed in 2021, a transaction that did not face the same level of regulatory opposition because it involved private equity rather than a direct competitor. Coupe's successors at Sainsbury's have focused on cost-cutting and defending market share rather than pursuing transformational M&A.
Key Facts: Sainsbury's-Asda Merger Timeline
- Announcement date: 30 April 2018
- Asda valuation in deal: Approximately £7.3 billion
- Walmart's stake in combined business: 42%
- CMA Phase 2 referral: August 2018
- CMA provisional findings: February 2019
- CMA final block: 25 April 2019
- Deal abandoned: 25 April 2019
- Mike Coupe retirement announced: January 2020
- Mike Coupe stepped down: 31 May 2020
