Asda and Sainsbury’s confirmed today they plan to go ahead with their mammoth merger – but they aren’t the only big businesses making waves at the moment
From the deal bringing together two supermarket powerhouses in the UK to another combining two of the USA’s largest mobile phone network operators, mergers are seemingly the tactic of choice for big businesses looking to dominate their markets in 2018.
Last year saw companies announce more than 50,600 transactions valued at a total of £2.5 trillion, according to international industry body the Institute for Mergers, Acquisitions and Alliances, and already this year similar-sized deals could be on the table.
We’ve taken a look at which deals look set to dominate the headlines this year – and those with big promise that may not quite happen.
Asda and Sainsbury’s
With 31% of the supermarket sector on the line once the £13bn merger is complete, this is one to watch.
Both Asda and Sainsbury’s reported financial losses last year of 15% and 19%, respectively.
However, the proposed merger not only promises to net the grocery giants a combined revenue of £51bn and place them ahead of Tesco as the UK’s number one supermarket, it also looks imminent, following the release of the merger details on earlier today.
Bharti Infratel and Indus Towers
India’s two largest mobile phone network operators are set to create the biggest telecommunications tower business outside China by merging their infrastructure assets for a combined value of $14.5bn (£10.5bn).
The move was prompted by increasing competition from Reliance Jio, a new mobile phone network operator offering cut-price data packages.
T-Mobile and Sprint
AT&T and Verizon are at the top of the pile when it comes to major US wireless providers, but T-Mobile and Sprint are looking to create a potentially competitive third-way, valued at $146bn (£106bn).
The deal, which would involve T-Mobile buying rival network Sprint for $26bn (£18.9bn), has been a while in the making and was cancelled as recently as October 2017.
Before then, it was stifled by concerns from the Obama administration.
Now though, subject to review by the justice department and the Federal Communications Commission, the wheels are in motion.
Should it go ahead, T-Mobile boss John Legere has said the firm would spend $40bn (£26bn) on building a 5G network in the next three years.
Xerox and Fujifilm
Activist investors sued to stop Fujifilm’s takeover of Xerox coming to fruition and were partly successful when US judge Barry Ostrager, of the Supreme Court of the State of New York, granted a preliminary injunction last Friday.
The setback occurred shortly after American printing giant Xerox and Japanese photography company Fujifilm began renegotiating the $6.1bn (£4.5bn) deal, and came as a result of Xerox CEO Jeff Jacobson being “hopelessly conflicted” over the deal, according to Judge Ostrager.
SSE and Npower
The Competition and Markets Authority has raised concerns about British energy firms SSE and Npower’s on-going merger, citing a “substantial lessening of competition”.
If the two companies – part of the so-called Big Six in the UK energy market – can address the issues before 3 May, however, the potential deal would create the second largest energy company in the UK with around 11.5 million customers, trailing only British Gas.
Hammerson and Intu
Hammerson had planned to buyout its shopping centre operator rival Intu Properties for £3.4bn after the announcing the proposed deal last December.
However, directors at Hammerson – which owns London’s Brent Cross and the Bullring, in Birmingham – said in a statement earlier this month that the deal was “no longer in the best interests of shareholders” and pointed to the notorious length of the merger process as an investment they are not prepared to make.
Had the deal gone through, it would have created a £21 billion pan-European portfolio also including the intu Metrocentre, in Gateshead, and intu Trafford Centre, in Manchester.
Given the amount of retail closures over the past few years – BHS, Toys R Us, Maplin and New Look are among those either shedding stores or out of business entirely – it may yet prove to be a wise decision.
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