Bottom Line: Family will struggle to get backers to bite
INVESTORS in Morrisons clearly aren’t convinced that a private equity prince is waiting in the wings ready to swoop with a buyout offer for the struggling supermarket.
After an initial leap upwards – recovering little of the downwards slump it has seen over the past two year – shares closed just 0.25 per cent higher, barely outperforming a flat FTSE. It’s a shame. Taking the company private would inject some much needed direction into a firm that has struggled to keep up with the changing world of supermarket shopping; Morrisons has been late to the game with both its online and convenience offerings, and seen its sales slide accordingly.
But a buyout is a big ask. The jewel in the grocer’s crown – its vast portfolio of freehold assets – could be worth as much as £10bn, leading analysts to speculate that bids for the stock would have to come in above 330p, a huge premium to the 237.8p it closed at yesterday. That sort of number would require two or more parties to come on board, when convincing one seems like hard enough work. At the same time, it could threaten the one good thing that Morrisons has going for it – the nascent deal with Ocado to provide a much-needed online delivery service.
There’s no doubt that with Xmas sales down 6.1 per cent (like for like) and activists pushing for a shake-up, something at Morrisons has got to give. Unfortunately for the founding family, it looks unlikely that a fantasy suitor is going to swoop in soon.