Morrisons shares rocket in anticipation of bidding war
MORRISONS shares have soared by a third after the supermarket chain rejected a £5.5billion approach from a US private equity heavyweight.
Investors are now banking on Clayton, Dubilier & Rice upping its offer, triggering a possible bidding war.
Online giant Amazon is seen as another suitor for the Bradford-based chain.
Shares in Morrisons went up to 240p after the approach.
The move prompted a rise on other store shares yesterday, as the value of Britain’s biggest listed supermarkets leapt by £2.6billion.
Shares in Sainsbury’s, considered another likely takeover target, jumped 3.8 per cent.
Tesco rose 1.7 per cent, with shares in online supermarket Ocado climbing four per cent and Marks & Spencer was up 2.8 per cent.
Supermarkets are seen as rich pickings for big money buyers, including foreign private equity barons.
Grocers raked it in during the pandemic, with online sales booming.
Yet their stock market values are seen as cheap.
Morrisons also has plenty of assets, including property, which are highly attractive. It comes after billionaire brothers Zuber and Mohsin Issa, along with a private equity firm, snapped up Asda for £6.8billion.
However, there are concerns around that and other possible deals which involve taking on huge debts.
Morrisons, whose chief executive is David Potts, said it had been sent an “unsolicited, highly conditional, non-binding proposal” by New Yorkbased CD&R.
It rejected the 230p offer after the board “unanimously concluded that the conditional proposal significantly undervalued Morrisons and its future prospects”.
Nick Bubb, an independent retail analyst, said: “CD&R aren’t going away and we suspect a deal can be done in the 250p-260p area.”
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “The expectation of further interest in the sector has led to a spurt of optimism about prospects for the grocers who have been capitalising on the shift to e-commerce.”