Monday 5 July 2021

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…?

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