European markets rose this morning led by the FTSE100 thanks to a huge surge in the share price of Sainsbury's plc. The supermarket chain saw its stock rise by over +17% at the open after the business confirmed a £13.3 billion merger with Walmart's ASDA.
The tie-up will cause Tesco to lose its spot as the UK's largest player in the food retail sector, and the news pushed the share price -3% lower in early trading. Sainsbury's said customers would see benefits including a 10% price cut on many products in-store, while Asda's US owner Walmart is set to receive just under £3 billion in cash and a 42% stake in the combined business.
The deal comes at a time when major retail firms are struggling amid a period of higher inflation, lower consumer spending on the high street and competition from discount firms like Aldi and Lidl.
M&A activity in Britain is surging, with new deal announcements climbing to an 11-year high, totalling £87 billion in Q1 of this year. New research from Ernst & Young also shows the number of UK businesses looking to pursue mergers and purchases of other companies are at levels not seen in 18 years of surveys. Amidst a sea of gloomy forecasts for the British economy, M&A activity is providing a glimmer of hope.
Via: https://invstr.com/