London pre-open: Stocks seen higher, with Sainsbury's/Asda deal in focus

London stocks were set for a positive open on Monday following an upbeat session in Asia, with all eyes firmly on the proposed merger between Sainsbury's and Asda.

The FTSE 100 was set to open 15 points higher at 7,517.

CMC Markets analyst Michael Hewson said the deal is sure to prompt calls for scrutiny from the Competition and Markets Authority over concerns about the pricing power this new tie-up might create.

"While these are valid concerns the reason the deal is happening is because of the already tough retail environment and the squeeze newcomers Aldi and Lidl are already putting on margins, along with Amazon.

"If a deal were to occur it seems likely that there might be some job losses given some store overlap, between the two brands along with management duplication. While this is a concern, both Aldi and Lidl are in the midst of a large store expansion programme with plans to open up to 80 new stores by 2022 with the creation of thousands of new jobs."

Sainsbury's confirmed earlier that it has agreed terms with Walmart over a merger with UK supermarket chain Asda to create a £51bn-revenue giant in exchange for a £3bn cash payment.

The agreed deal will see the FTSE 100 group hold 58% of combined business though on completion Walmart will not hold more than 29.9% of total voting rights.

Elsewhere, Mondi said it was buying Egypt's National Company for Paper Products and Import & Export (NPP) for EGP 510m (€23.7m) on a debt and cash free-basis.

NPP is a privately owned industrial bags producer, operating one plant in Giza near Cairo (Egypt) serving mostly regional customers, Mondi said.

For the year ended 31 December 2017, the Company generated revenues of EGP 577m (€29m) and adjusted EBITDA of EGP 107m.

Advertising giant WPP posted a 0.8% increase in first-quarter like-for-like revenue as it reiterated its guidance for 2018.

The company's LFL revenue less pass-through costs was down 0.1%, with the UK, Asia Pacific and Latin America up strongly, offset by declines in North America and Western Continental Europe.