Morrisons Facing Bidding War After Accepting Fortress-Led Offer Worth £6.3bn

Another private equity group, Apollo Global Management, is among the potential counter-bidders circling Morrisons.

NamNews Implications:

• Despite promises re future action…
• …a bidding war will result in a higher takeover price.
• Meaning that the purchaser will need to cover the additional cost.
• (and justify the level of investment…)
• It can be assumed that Morrisons are running a very tight operation (i.e. little scope for internal cost reduction)
• Therefore remaining options will then be:
• Sale & leaseback of the 85% owned retail estate (resulting in lower net margins because of having to pay rent for stores).
• Downward pressure on supplier prices.
• Or a mix of both…?