Jun 21, 2021
Legal and General slams Morrisons bid as shares surge
CD&R approached Morrisons with a 230p-a-share offer last week, giving the UK's fourth-largest supermarket group an enterprise value of £8.7bn. "The [retail] sector generally looks undervalued, and private equity look to be interested in Morrisons partly because it has a lot of freehold property which they would 'sale and leaseback' to generate cash to pay back to themselves," said Koch. Shares in Wm Morrison surged 30 per cent to 232p in early trading on Monday following the disclosure of the approach for the UK supermarket chain over the weekend. CD&R is set to push ahead with its pursuit of Morrisons despite its initial approach being rebuffed, people close to the transaction said. M&G, which is also a shareholder in Morrison's, last month criticised plans to sell FTSE 250-listed UDG Healthcare to CD&R, while Schroders, a top 20 investor in the supermarket group, hit out at transport operator FirstGroup's sale of its US business to Swedish buyout group EQT. Morrisons has an unusual structure, which includes one of the UK's largest food manufacturing businesses and ownership of 85 per cent of its 497 stores, prompting some analysts to say that a higher offer price could be justified. Although Morrisons has navigated the pandemic well, "They have not been doing brilliantly well lately and the share price performance has been underwhelming for some time", said one analyst.
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