London open: Sainsburys paces the advance on Asda tie-up plans
London stocks edged higher in early trade on Monday, underpinned by merger news as Sainsburys confirmed plans to merge with Walmart's UK unit, Asda.
At 0830 BST, the FTSE 100 was up 0.2% to 7,513.27, while the pound was down 0.2% versus the dollar at 1.3758 and 0.1% lower against the euro at 1.1352.
Sainsbury's surged 18.5% after confirming that it has agreed terms with Walmart over a merger with UK supermarket chain Asda to create a £51bn-revenue giant in exchange for a £3bn cash payment.
The agreed deal will see Sainsbury's, which also reported its final results, hold 58% of combined business and retain its chairman, chief executive and chief financial officer, as well as its listing in London. Tesco shares were down 4.3% on the news, while Morrisons was 2.8% lower.
Spreadex analyst Connor Campbell said: "Obviously regulators are going to have a LOT to say about such a landscape-shifting deal, meaning there’s a long way to go before this bonkers but potentially brilliant marriage becomes a reality.
"Investors are already signalling how they feel about the merger, however; Sainsbury’s rocketed as much as 20% higher after the bell, sitting between £3.15 and £3.20 for the first time in a few months shy of four years."
In its 52-week fiscal year, Sainsbury's reported a return to profit growth, with underlying profit before tax up 1.4% to £589m, with profits up 11% in the second half after cutting £185m of costs. Looking to the current year, Coupe said he was "comfortable" with the current City forecast for underlying pre-tax profit of 7% to £629m.
Elsewhere, Mondi was in the black after announcing the acquisition of Egypt's National Company for Paper Products and Import & Export (NPP) for EGP 510m (€23.7m) on a debt and cash free-basis.
Advertising giant WPP rallied as it posted a 0.8% increase in first-quarter like-for-like revenue as it reiterated its guidance for 2018.
Old Mutual advanced as the Anglo-South African financial services group said that its businesses continue to trade in line with the expectations outlined in its results back in March.
Aviva edged higher after saying it will make goodwill payments to shareholders who sold preference shares in the period from 8 to 22 March.
Randgold Resources fell after saying that industrial disputes at its Tongon gold mine in Côte d'Ivoire would hit 2018 production guidance of 290,000 ounces although it was making efforts to recover lost output.
Rank Group ticked lower after the FTSE 250 gambling company appointed former Ladbrokes executive John O'Reilly as chief executive with effect from 7 May, succeeding Henry Birch, while Mike Ashley's Sports Direct was in the red after disclosing stakes in US companies Finish Line and Iconic Brand Group.
On the broker note front, Barclays downgraded Victrex to 'underweight' and reinstated Elementis at 'equalweight'.
Market Movers
FTSE 100 (UKX) 7,513.27 0.15%
FTSE 250 (MCX) 20,305.16 0.17%
techMARK (TASX) 3,458.02 0.31%
FTSE 100 - Risers
Sainsbury (J) (SBRY) 313.99p 18.53%
WPP (WPP) 1,235.50p 7.58%
Old Mutual (OML) 259.40p 1.77%
Standard Chartered (STAN) 771.40p 1.40%
Kingfisher (KGF) 305.80p 1.26%
Evraz (EVR) 457.13p 1.10%
HSBC Holdings (HSBA) 726.40p 0.94%
Vodafone Group (VOD) 212.50p 0.93%
Scottish Mortgage Inv Trust (SMT) 477.26p 0.84%
Mondi (MNDI) 2,046.00p 0.84%
FTSE 100 - Fallers
Tesco (TSCO) 228.80p -4.28%
Glencore (GLEN) 357.70p -3.40%
Morrison (Wm) Supermarkets (MRW) 236.20p -2.83%
Marks & Spencer Group (MKS) 284.40p -0.73%
Randgold Resources Ltd. (RRS) 5,868.00p -0.64%
British American Tobacco (BATS) 4,015.50p -0.63%
Burberry Group (BRBY) 1,811.00p -0.60%
BP (BP.) 534.79p -0.56%
Rio Tinto (RIO) 3,970.00p -0.46%
Direct Line Insurance Group (DLG) 373.30p -0.40%
FTSE 250 - Risers
IP Group (IPO) 143.00p 2.73%
Thomas Cook Group (TCG) 123.00p 2.50%
Sanne Group (SNN) 619.00p 1.81%
Sirius Minerals (SXX) 31.26p 1.69%
888 Holdings (888) 277.00p 1.47%
Computacenter (CCC) 1,282.00p 1.26%
Virgin Money Holdings (UK) (VM.) 274.40p 1.25%
Polymetal International (POLY) 736.00p 1.16%
CYBG (CYBG) 303.40p 1.13%
Phoenix Group Holdings (DI) (PHNX) 791.19p 1.08%
FTSE 250 - Fallers
Dixons Carphone (DC.) 194.30p -4.80%
Victrex plc (VCT) 2,596.00p -3.06%
Greencore Group (GNC) 156.00p -2.64%
BGEO Group (BGEO) 3,468.90p -1.44%
Indivior (INDV) 456.80p -1.43%
Diploma (DPLM) 1,191.00p -1.33%
Dairy Crest Group (DCG) 551.00p -1.26%
Sports Direct International (SPD) 401.00p -1.18%
Vesuvius (VSVS) 590.00p -1.17%
Intu Properties (INTU) 194.85p -1.12%