Morrisons at risk as Brexit sparks takeover frenzy

Supermarket is vulnerable after fall in pound, warns its own house broker

FOREIGN vultures could swoop on Morrisons after a share price slump and a fall in the pound left it vulnerable to a takeover, experts warn.

The supermarket chain, led by chief executive David Potts ( pictured), is a leading candidate to fall to overseas buyers in a dealmaking frenzy driven by a drop in sterling due to jitters over Brexit.

This week Hong Kong’s richest man Li KaShing swooped on pub chain Greene King with a shock £2.7bn takeover offer and observers believe a host of other household names could soon follow suit.

The pound has fallen 2pc against the US dollar to below $ 1.22 since Boris Johnson became Prime Minister, as traders bet on economic turmoil because a No Deal Brexit looks increasingly likely.

Morrisons’ house broker Shore Capital said that a share price fall of more than 30pc over the past year, combined with Morrisons’ strong freehold property portfolio and relatively low debt pile, make it an attractive target.

Any deal could be followed by takeovers of companies such as ITV, Premier Inn owner Whitbread and pub chains such as Mitchells and Butlers.

Clive Black, head of research at Shore, said: ‘Morrisons is 85pc freehold and is Britain’s largest food manufacturer. A takeover is something absolutely to be thought about in the present market conditions.

‘It’s pretty clear that a whole raft of London investment banks are trawling the world, saying “do you want to buy this in Britain?”’ Morrisons declined to comment.

A raft of firms have already been snapped up in a spree sparked by the 2016 EU referendum. Japan’s Softbank made a £24bn grab for British microchip maker Arm Holdings and firms including Cathedral City maker Dairy Crest, Alton Towers owner Merlin Entertainment and Telford Homes have fallen into foreign hands. Takeovers have also been spurred by activist investors taking stakes in struggling firms.

Hedge funds have been pushing for change at companies spanning Saga to Whitbread, making buyouts more likely. Meanwhile, Virgin Media’s US owner Liberty Global’s growing stake in ITV has sparked speculation that it could fall under American control.

And Nigel Parson, analyst at Canaccord Genuity, said pub chain Mitchells and Butlers’ concentrated share ownership means a buyer ‘would only need to make a few calls’ to gauge interest. Joe Lewis, who made an unsuccessful bid for it in 2011, owns 27pc. Irish racing magnates, John Magnier and JP McManus, hold 23pc.