Asda set to return to its Yorkshire roots after Sainsbury's deal is blocked

The Competition and Markets Authority (CMA) has prohibited the deal in its entirety rather than insist on store sell-offs. Leading retail analyst Clive Black at Shore Capital said the decision was "good news for Leeds and Yorkshire". "We really did not take at face value the statements that were made by both Sainsbury's and Asda at the start which were: 'We're going to run two head offices and we're going to keep two fascias'," said Mr Black."If the deal had been approved, within two years we would have seen the deconstruction of Asda in West Yorkshire."There were real fears that Asda House could close as a result of a deal with Sainsbury's and that Asda would take the brunt of any store closures and job losses.Mr Black believes there is 50/50 likelihood of Asda floating on the stock exchange or private equity buyers coming in. Both outcomes could be good for Yorkshire as private equity would float Asda after a few years, returning it to the London Stock Exchange after 20 years of Walmart's ownership.Five years ago Asda lost its way with falling like-for-like sales, but this was remedied when Yorkshire-born Roger Burnley took over as CEO in January 2018."You've got to give Roger Burnley and his team credit for the way they've reacted with the distraction for the last year," said Mr Black."Walmart has put more resources into Asda over the past two and a half to three years after milking it for cash."GMB, the trade union for Asda workers, said the decision will reassure tens of thousands of Asda workers.GMB said thousands of workers and shoppers had signed a GMB petition urging the CMA to “protect our communities and people’s livelihoods and block the merger’”.The union said Asda members have been worried about their future since the merger was announced last year.Tim Roache, GMB general secretary, said: “For Asda workers, this is the right decision after the CMA’s provisional findings.“Swathes of stores and depots would have to have been sold off, with jobs put at risk and no real benefit for customers or communities. “The workforce has been through months of uncertainty, worrying about what’s going to happen and wondering if their stores or depots would be sold from under them. “It’s time for Asda to move on, and to give some stability and security to the staff who work day in, day out to make the company profitable.” Usdaw (Union of shop, distributive and allied workers) also welcomed the CMA’s decision, but called for the watchdog to give workers a greater say in future decisions.Paddy Lillis, Usdaw general secretary, said: “The CMA’s blocking of the proposed Sainsbury’s and Asda merger has brought to an end a period of uncertainty for staff, who have been concerned by speculation of store closures. We will continue to work with Sainsbury’s, Argos and Asda to grow the businesses and secure our members jobs.“Usdaw remains deeply concerned about the operation of the CMA and we renew our call on Government to change setup to ensure that workers voices are fully heard and represented in future investigations.”Andy Brian, partner and head of retail at Yorkshire law firm Gordons, said the deal would have led to one business holding a huge combined share of the grocery market.“It is highly likely that the deal would have resulted in store closures, the cessation of operations at various distribution centres, and therefore multiple job losses," said Mr Brian."It is also probable that some central functions would have been merged and that some of those functions would therefore have been taken out of Leeds."He added that the news will also be welcomed by suppliers.“A stated objective of the deal was to drive lower prices from suppliers. Asda has plenty of local suppliers whose owners will have feared that the forthcoming squeeze would put their business, and therefore even more jobs, at risk," he said.