Sainsbury's, ASDA merger shakes up retail sector as European shares rise

In Europe all eyes were on Sainsbury's, whose shares shot up 20 percent at the open after the retailer agreed a 13.3 billion pound merger with Walmart's ASDA.REUTERS  |  April 30, 2018, 15:18 IST
FILE - In this file photo dated Wednesday, June 17, 2009, a branch of Sainsbury's supermarket is seen in Selsdon, south London. It is reported Monday April 30, 2018, Sainsbury's has agreed a merger deal with Walmart Inc.'s U.K. unit, Asda, for 7.3 billion pounds (dollars 10.1 billion U.S.) in cash and stock in a deal that would create Britain's largest supermarket chain, but the deal is expected to be subject to review by Britain's Competition and Markets Authority.Photo/Sang Tan, FILE)
FILE - In this file photo dated Wednesday, June 17, 2009, a branch of Sainsbury's supermarket is seen in Selsdon, south London. It is reported Monday April 30, 2018, Sainsbury's has agreed a merger deal with Walmart Inc.'s U.K. unit, Asda, for 7.3 billion pounds (dollars 10.1 billion U.S.) in cash and stock in a deal that would create Britain's largest supermarket chain, but the deal is expected to be subject to review by Britain's Competition and Markets Authority.Photo/Sang Tan, FILE)

LONDON, - A multi-billion pound merger between British supermarket Sainsbury's and ASDA shook up retail stocks on Monday while European benchmarks rose, on track to end the month of April with a gain.

The pan-European STOXX index rose 0.1 percent while Germany's DAX gained 0.3 percent, buoyed by investors' improved risk appetite as tensions between North and South Korea eased, and companies delivered strong earnings figures.

In Europe all eyes were on Sainsbury's, whose shares shot up 20 percent at the open after the retailer agreed a 13.3 billion pound merger with Walmart's ASDA.

Tesco, whose position as UK leader in terms of market share would be overtaken by the new merged group, tumbled 2.5 percent on the news, weighing retail stocks down.

Morrisons and Marks & Spencer also fell 0.6 percent to 0.7 percent. France's Carrefour however gained 0.4 percent, while Casino rose 0.9 percent.

In other deal news, Deutsche Telekom shares rose 1.5 percent to the top of the DAX after the German firm clinched a $26 billion deal to merge T-Mobile US and Sprint.

In results-driven moves, the world's biggest advertising group WPP surged up 9 percent after reporting forecast-beating sales in its first results without founder Martin Sorrell.

The agency's gains boosted the pan-European media sector up 1 percent. Financials stocks, the most sensitive to investors' risk appetite, were the biggest driver of the STOXX. (Reporting by Helen Reid; editing by Julien Ponthus)