Morrison (wm) Supermarkets Share Discussion Threads

[philanderer] 21/6/2021 09:20

Retail and M&A editor of The Times

Ashley Armstrong @AArmstrong_says
·

Morrisons share price has jumped 53.85p, 30.65%, to 233.2p so far this morning - through the 230p proposal by private equity bidder CD&R meaning investors are confident there’s going to be a higher bid coming from somewhere. Analysts reckon M board will have to engage around 245p

[philanderer] 21/6/2021 09:18

So, this morning’s share price surge suggests the City expects either a higher bid from Clayton, Dubilier & Rice, or another suiter, Mould concludes:

“This is not to say Morrisons is a slam-dunk. But you can see the value case for the shares and that must be the key attraction for CD&R. The issue now is how the big shareholders respond and whether they – and the Morrisons board – feel they can squeeze out a higher bid or feel sufficiently confident in Morrisons’ strategy and long-term competitive position to spurn the offer altogether.

“The shares traded at 235p early on Monday which is higher than that 230p proposal from CD&R. The market therefore seems confident that the suitor will have to raise its offer price or someone else might step into the game and we’ll see a bidding war.

“Amazon has long been touted as a potential buyer for Morrisons to help give it a much stronger foothold in the UK grocery markets so that’s an obvious name to watch.”

[grafter] 21/6/2021 08:52

Morrisons said it had rejected a preliminary bid by the US buyout firm Clayton, Dubilier & Rice because it 'significantly undervalued Morrisons and its future prospects'

[dongle features] 21/6/2021 08:34

Well done to all long term holders here.

For a long time this was trading at quite a depressed level with a decent dividend to boot.

Quite a few dividend paying blue chip FTSE companies are still pretty cheap despite their rising share prices over the last several months.

[gregmorg] 21/6/2021 08:31

Tis what makes a market-or something like that!

[pickles builder] 21/6/2021 08:27

Unless there is political or shareholder pushback it appears another higher bid is in the offing.
I’ve jumped on board.
Either way, limited downside makes this a reasonable play compared to other blueish chips out there, for the moment.
I’d expect two more offers depending on how generous the next one is.
230p as an opening salvo would suggest closer to 300-320 would be expected.

[chinese investor] 21/6/2021 08:15

I sense an agreed offer of 245p plus 5p dividend !

[alex1621] 21/6/2021 08:04

Good result. I'd have held a bit longer, as there might be a competitor bid and it seems likely that the current bid is just a starting position, and will likely go higher. The first public bid is seldom the final.

[bend1pa] 21/6/2021 08:01

Happy to sell (@just under 235) and a nice gain over 8 months. Never thought this dog would have its day, but the market is an unpredictable beast at times.

[stockpicker99] 21/6/2021 07:41

Would like Amazon to buy Morrison's and integrate it and leave it trading as a store as well . 300p per share knock out deal ASAP

[stockpicker99] 21/6/2021 07:39

Clearly platforms not keeping up with trading in Morrison's this morning , clearly mega interest in an undervalued cash cow stock !

[chinese investor] 21/6/2021 07:29

Looking Good !

[stockpicker99] 21/6/2021 07:19

Cannot understand 233p. 08:10 then 178p 08:19 for Morrison's has offer been withdrawn ?

[chinese investor] 21/6/2021 07:13

Next 10 minutes are important !

Will it rise or fall ?

[igoe104] 21/6/2021 07:10

Wheres the idoit who said these would go down hiding now.

[nhs buyer] 21/6/2021 06:42

Keen on Morrison’s as is.
I like shopping there.
Good dividend.
I guess key here is if Amazon come in with a bonza bid for their own distribution strategy i.e. at +300p - then one has to accept the ‘market’ so to speak.

[adrian noble] 21/6/2021 06:37

CD&R's confirmation that they will pursue the takeover regardless of the boards rejection shows a bid closer to 10bln could be the end result.

Therefore, 230p is more than realistic for this morning.

I see this going to around 290p prior to any takeover.

[chinese investor] 21/6/2021 06:35

U.S. buyout group Clayton, Dubilier & Rice LLC has chosen a soft target in approaching Wm Morrison Supermarkets Plc with a 5.5 billion pound ($7.6 billion) takeover proposal.

The U.K. grocer says the price is too low.

But its defences are weak and it could have a fight on its hands to stay independent.

The only surprise about CD&R’s 230 pence per share approach is that it has taken so long for a bidder to emerge.

Pandemic shopping habits combined with lack luster share price performances have made grocers alluring buys.

Morrison is the smallest of Britain’s so-called big four supermarkets and has all the ingredients to be an attractive private-equity target.

There’s almost 5.8 billion pounds of freehold property on Morrison’s books, compared with a market capitalization of 4.3 billion pounds on Friday.

The share price has underperformed the FTSE All Share Index over the past two years, even amid a turnaround under Chief Executive Officer David Potts.

Management has been criticized for receiving high pay despite the poor shareholder returns.

The premium being dangled is 29% above the shares’ last close (which was also roughly their three-month average price) and shareholders would keep a 5 pence dividend.

That’s not an offensive offer, but it’s a long way from a knockout.

A sweetened proposal with a juicier premium would put the board under real pressure.

CD&R won’t want to go hostile, but shareholders could demand that Chairman Andrew Higginson engage.

Given Morrison’s large freehold estate — which accounts for more than 80% of the supermarket’s stores and distribution centres — the traditional defence against a takeover would involve selling off property to raise cash.

A mini breakup, disposing of the group’s food manufacturing arm, is the other obvious tactic. Shareholders would get a big windfall from the proceeds and be left with a leaner grocer.

Although a private equity bidder may feel comfortable with such strategies, they probably wouldn’t work for Morrison as a public company.

The history of U.K. retail is littered with such sale-and-leaseback deals that have saddled companies with long rental commitments and too much debt.

Morrison already has net borrowings of 1.8 billion pounds excluding leases.

And exiting manufacturing could undermine the company’s pricing strategy:
Making its own quiches and filleting its own fish helps keep costs low — and value is central to its market positioning.

Shareholders may also be sceptical of any renewed promises by management to improve trading.

Although German discount grocers Aldi and Lidl were hurt by the pandemic — as consumers switched back to big weekly shops in traditional supermarkets — they are gaining traction once more.

The more realistic course for the board would be to fight for a high-priced deal rather than no deal.

That means preparing a list of alternative buyers who could get an auction going.

Morrison shares closed as high as 269 pence in August 2018.

An offer at 250 to 300 pence — at least a 40% premium — would be tempting.

At that level, a deal would cost at least 7.8 billion pounds including assumed net debt (but excluding leases), or 7 times this year’s expected 1.1 billion pounds of Ebitda.

A deal with CD&R might simply look too cozy.

Terry Leahy, the former chief executive officer of Tesco Plc, is a senior adviser to the firm. Higginson is Tesco’s former finance director, and Potts was the director responsible for Tesco’s stores.

Last year, two of Morrison’s non-executive directors quit on concerns about the closeness of Higginson to Potts.

[ny boy] 21/6/2021 06:03

Amazon, don’t pay big money lol delusional talk… 350p+ lol

[philanderer] 21/6/2021 00:17

"Clayton, Dubilier & Rice set to continue pursuit of Morrisons"


..Another analyst said 250p a share was probably the price beyond which negotiations would become serious, and pointed out that Silchester (largest shareholder with 13%) acquired much of its stake at prices above 200p a share.

[justiceforthemany] 20/6/2021 20:33

Any successful bid would have to be north of 300p - agree

[rolo7] 20/6/2021 19:09

And hopefully at sbry also!