Morrisons shares jumped over five per cent this morning on rumours that the founding family is planning to take the company private.
According to Bloomberg, a number of private equity firms have been approached to see if any is interested in a buyout, which would be valued at over £7bn.
Reported names include CVC Capital and Carlyle Group.
But, as Ishaq Siddiqi of ETX Capital points out, selling the supermarket brings with it challenges. Ugly Christmas sales, with a steep decline in earnings, prove the group’s finding it difficult in a saturated food market.
Siddiqi thinks private equity firms will have “a tough time” finding long-term value in Morrisons unless reassured on strategy, reinforced by a turnaround in operating and sales performance.
Unlikely that PE firms could make an immediate move on Morrisons just yet but it’s likely they have the food retailer on file now, waiting for improve in the group’s business activity before snapping it up.
A report yesterday by Kantar said till receipts for the store fell 2.5 per cent in the three months to 2 Februrary.
The rumour excitement also boosted shares in Tesco and Sainsbury’s - the sector’s first and third largest groups respectively.
Shares in Morrisons are currently up over three per cent.