Morrisons’ share price leaps to 28 per cent on takeover offer

Morrison’s shares closed at 228p on Monday, just below the 230p-a-share proposed by Clayton Dubilier & Rice.

Morrisons’ share price has surged 28 per cent  after a US private equity firm CD&R made an offer to buy the Uk’s fourth largest supermarket group  which has 500 stores and employs 118, 000 people, for £5.5 bn. Equity firms Apollo Global Management and Lone Star Funds  which had been interested in buying Asda.

Morrisons closeness of its relationship with Amazon since 2016, under which the supermarket sells fresh produce and food through Amazon’s website is critical.

Amazon owns the US supermarket and Whole Foods, which also has seen outlets in London. 

Morrisons, however, rejected the hostile £5.5 bn takeover bid from US firm.

Under UK takeover rules, CD&R has until 17 July to announce a firm intention to bid or walk away, its initial proposal offers 230p per share for Morrisons.

In addition to the cash offer, CD&R would take on Morrisons’ £3.2bn of debt, taking the total value of any deal to almost £9bn.

Legal and General Investment Management, which is a top 10 shareholder in Morrisons, criticised the private equity firm’s approach. The private equity look to be interested in Morrisons’ partly because it has a lot of freehold property which they could sale and leaseback to generate cash to pay back to themselves.

Too often Private equity firms load the companies with debt and leave while pocketing the dividends while employees lose their jobs and staff who have paid Ito the pension scheme.

Morrisons headquarters in Bradford, West Yorkshire, England founded in 1899 by William Morrison.