SBRY Sainsbury (j) Plc

By Ian Walker

LONDON--The U.K. Competition and Markets Authority confirmed Friday that Germany's Celesio AG (CLS1.XE) will have to sell pharmacies in 12 areas of England and Wales to a new owner approved by the regulator for its takeover of Sainsbury PLC's (SBRY.LN) pharmacy business to get the green light.

The decision follows the regulator's initial review in April which identified 13 areas where the two companies' pharmacies are such close competitors that the merger would lead to a substantial drop in competition. It added Friday that Celesio can't close the pharmacies.

"By selling the Lloyds pharmacy in those areas to a new owner with the relevant expertise and the incentive to attract customers through its service quality, we can ensure that customers do not lose out from this deal," said Simon Polito, inquiry chair.

The U.K.'s second-largest grocer by market share announced in July 2015 that it was selling its pharmacy business to LloydsPharmacy owner Celesio.

Celesio is buying Sainsbury's 277 pharmacies, which are usually located inside Sainsbury's supermarkets. Through its LloydsPharmacy subsidiary, Celesio operates around 1,540 pharmacies across the U.K.

-Write to Ian Walker at ian.walker@wsj.com; @IanWalk40289749

(END) Dow Jones Newswires

July 29, 2016 03:10 ET (07:10 GMT)

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