What's going on?
News broke on Sunday that British retailer Marks & Spencer and online supermarket Ocado have held secret talks about the possibility of teaming up. Joining forces is all the rage right now…
What does this mean?
Ocado’s automated warehouse infrastructure already delivers groceries to customers of big-name stores across the US, Canada, and France. M&S has trailed British rivals in developing online grocery delivery, and a deal with Ocado could see it either acquire the vans and distribution centers required to launch its own service – or simply hand over its products and let Ocado take care of the rest.
Sometimes it can pay to tweak the terms of a partnership. American industrial giant General Electric (GE) said late on Friday it was rejigging a merger of its rail transportation unit with former rival Wabtec in order to net itself more cash.
Why should I care?
For markets: GE investors worried about their pennies?
Ocado’s shareholders sent its stock up 2% on Monday – M&S would likely pay handsomely for its help, however the partnership works. But GE’s stock fell 3%. The adjusted terms of its deal with Wabtec would give it over $3 billion extra cash, which the company could use to pay down some of its $100 billion debt. But investors may be concerned about how much more cash GE needs and how quickly – reigniting fears that the company may be forced to sell off parts of its business on the cheap.
The bigger picture: Teams forming left, right, and center.
While GE, Wabtec, and the grocers are uniting to take on challenging times, semiconductor company Entegris and chemicals company Versum Materials are joining forces in happier days. The two announced a $4 billion deal on Monday which will see Entegris buy Versum and create a major supplier to the semiconductor industry. The new Entegris should be well positioned to capitalize on the weedy growth of the Internet of Things: the networking of household items like lights, doorbells, and mirrors – all of which require semiconductors.