Top Morrisons shareholder slaps a £6.5bn price tag on the supermarket chain after rejected private equity bid
A top Morrisons shareholder has said a bid near £6.5billion for the supermarket chain should be considered by the board.
Morrisons stock has soared this month after the grocer rebuffed a 230p-per-share offer from Clayton Dubilier & Rice (CDR), saying it ‘significantly undervalued’ the business and its prospects.
Now JO Hambro Capital, the tenth biggest shareholder with 3 per cent, said offers approaching 270p a share ‘merit engagement and consideration’.
Morrisons stock has soared this month after the grocer rebuffed a 230p-per-share offer from Clayton Dubilier & Rice, saying it ‘significantly undervalued’ the business and its prospects
It said CDR should pay ‘a fair price’ to access the benefits of combining Morrisons’s petrol station business with its Motor Fuels Group, a tie-up that would create a forecourt giant.
But this price could rise to 280p or above, if the private equity predator pursued a sale and leaseback of Morrisons stores to pay dividends or fund aggressive expansion.
‘This would create a more volatile asset,’ Hambro analysts said, describing this as a ‘high-octane’ approach.
CDR has until July 17 to make an improved bid, or it will be required to step away for six months.
Yesterday, Morrisons shares climbed 0.6 per cent, or 1.5p, to 236p.
The supermarket is attractive to private equity because it owns 85 per centof its 497 stores, and has one of the UK’s largest food manufacturing businesses.
But Legal & General, the UK’s largest asset manager and Morrisons’ 11th largest shareholder, slammed the bid, saying CDR would not add ‘any genuine value’.