3 Mergers Misjudged by the Market

Merchant Trust's Simon Gergel highlights 3 mergers where the stock market has initially been sceptical - could the market have got wrong and shareholder be rewarded?

External Writer 20 January, 2017 | 12:10PM

Morningstar's "Perspectives" series features investment insights from third-party contributors. Here, Simon Gergel, Manager of The Merchants Trust, weighs up M&A in the UK market.

“In the short term the market is a voting machine, in the long term it is a weighing machine” is one of the most famous stock market quotes, by Benjamin Graham. It denotes how the consensual views about a company or industry can get carried away and move to extreme levels in the short term, but ultimately share prices will reflect the true worth – or weight – of a business. 

Nowhere is this more visible than in the world of mergers and acquisitions. How often have we seen the stock market get really enthusiastic about a takeover deal or an acquisitive company, only to have a rude awakening later on, when the dust settles?

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
GlaxoSmithKline PLC1,346.40 GBP0.00
Royal Dutch Shell PLC B1,350.20 GBP0.00
Sainsbury (J) PLC248.70 GBP0.00

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