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.
UK health leaders have called for an "emergency task force" to tackle the childhood obesity crisis in the country as, for the first time, they are faced with a generation of patients "who may predecea...
Russian food firm Ros Agro which has interests in sugar and meat has posted an increase in net profits for the first half of 2014. ...
Tyson Foods has completed its US$8.55bn acquisition of Hillshire Brands, with shares in the Jimmy Dean sausage maker delisted before the market opened today (29 August) - and its CEO leaving the busin...
New Zealand dairy group Synlait Milk revealed today (28 August) it has hit the "major milestone" of receiving regulatory clearance to begin exporting finished product from its new NZ$28.5m dry blendin...
ConAgra Foods has responded to investor criticism of its palm oil usage by committing to source 100% sustainable palm oil by December 2015....
- BRICs and beyond: Fonterra, Beingmate partnership
- On the money: Mengniu hones in on "star" brands
- just-food interview: Agropur CEO Robert Coallier
- Comment: Competition to rise on whey investments
- Consuming issues: The hunger-obesity paradox
- Valio lactose-free trucks stopped at Russia border
- H1 profits down at dairy group FrieslandCampina
- UK firm Pasta Reale enters administration
- Bisco Misr says Kellogg eyeing majority stake
- Heinz halves sugar in ketchup launch