Blog: Morrisons murmurs rumble on
Dean Best | 20 February 2014
Morrisons' recent performance has been called into question in the City
Speculation over the future of Morrisons continues, with a fresh report claiming banks are working on finance to back a possible sale of the UK's fourth-largest grocer to private-equity funds.
Reuters said yesterday (19 February) bankers are looking at debt financing worth GBP5bn to support a potential sale.
"The size of the transaction, which could get as high as 10 billion pounds, could require a number of private equity players to team up, given the size of the equity cheque needed," an anonymous source described as a senior leveraged loan banker told Reuters.
The news agency said the Morrison family, which owns just over 9% of the retailer, had contacted private-equity houses after the retailer's disappointing Christmas.
That claim echoed one made by Bloomberg last week, which said the Morrison had held talks with buy-out houses Apax Partners, Carlyle and CVC Capital Partners. However, Morrisons founder Sir Ken Morrison, speaking to The Independent, promptly expressed "surprise" at the Bloomberg report.
Nevertheless, the Reuters report shows the speculation is continuing. Morrisons has seen sales come under pressure in recent quarters. Its sales fell in its last financial year, which ran until 3 February. Sales have also declined year-on-year in each of the first three quarters of Morrisons' current fiscal year.
Sir Ken has been a critic of Morrisons in recent years. In the summer of 2012, he warned Morrisons was losing relevance with core customers, a view echoed by some industry watchers.
Data issued by Kantar Worldpanel last week showed Morrisons had seen its share of the UK grocery market erode year-on-year, prompting criticism from the City over its performance and trading strategy.
Reflecting on the Bloomberg report last week, one critic, Shore Capital analyst Clive Black, said: "Given Morrisons' trading weakness and relatively low valuation, such headlines and potential initiatives are to be expected to some degree at this time, in our view. Indeed, we would expect a number of serious private-equity investors to be running the rule over Morrisons."
Shares in Morrisons spiked yesterday afternoon and closed the day up 4.83%.
This morning, at 10:24 GMT, the stock was down 1.60% at 240.10p.
just-food is downing tools for the public holiday in England and Wales on Monday 31 August. We'll be back at our desks on Tuesday 1 September....
Heinz's flagship product has provoked the ire of a competitor in Israel, a story that has attracted headlines in the international mainstream media. But even after making a change to the labels, a bot...
A lawsuit tabled in the US has brought fresh attention to the supply chain for prawns, which hit headlines around the world last year amid claims of slavery....
- What US companies might Nomad Foods buy?
- Challenges for General Mills with The Good Table
- Why investors are concerned about water risk
- Greek crisis - The impact on shopper behaviour
- Competition intensifies among UK burger chains
- Just Mayo under fire from US FDA after complaint
- B&G Foods "front-runner for Green Giant"
- FrieslandCampina H1 earnings up despite flat sales
- Brownes Dairy "attracts eight suitors"
- General Mills to work on artificial ingredients
- Management briefing: just-food’s industry outlook for 2015
- Food Flavourings & Colourings (UK) - Industry Report
- Nestle USA, Inc.: Consumer Packaged Goods - Company Profile & SWOT Analysis
- Bakery Market in Japan: Forecast, and Market Analysis 2015-2019
- Probiotic Ingredients Market by Function, Application, End Use, Ingredient, and by Region - Global Trends & Forecast to 2020