Why Wall Street's Latest Stock Megamerger Disappointed Investors
Stock market volatility remained the order of the day on Friday, as major market benchmarks stayed under pressure amid worries about sustained high inflation and the potential for economic headwinds. As of 11 a.m. ET today, the Dow Jones Industrial Average (DJINDICES: ^DJI) was holding up reasonably well, buoyed in part by strong performance by big banks. However, the S&P 500 (SNPINDEX: ^GSPC) and Nasdaq Composite (NASDAQINDEX: ^IXIC) were both down more than 1%.
As stock prices have fallen, companies have become increasingly interested in joining forces through mergers and acquisitions. Grocery store retailers Kroger (NYSE: KR) and Albertsons (NYSE: ACI) announced early Friday that they would indeed be looking to merge, confirming reports from earlier in the week. Yet both stocks fell on the news. Below, you'll learn more about what the two grocery companies have in mind and why shareholders seemed less than excited about the prospects for the megamerger.
The stock price movements on Kroger and Albertsons were unusual in the wake of a merger announcement. It wasn't terribly surprising to see Kroger shares fall 4%, since the acquirer in a merger situation often sees its stock decline. However, the 7% drop in Albertsons stock wasn't consistent with what investors typically see.
Source Fool.com
