Private equity hawks eye Morrisons Published: 08 May, 2007
SPECULATION was growing in the City of London this week that the supermarket group Wm Morrison, a major retailer of fresh fish, could soon be the target of a £9billion private equity bid.
It is less than a month since Sainsbury’s successfully beat off a private equity consortium offer thanks to family intervention, although since then Middle East interests have been stealthily increasing their share holding in the company.
Like Sainsbury’s, Yorkshire based Morrisons has a strong family tradition and that family still owns just over 15 per cent of the business. Many of their supermarkets have an in-store fishmongers shop as part of a village high street concept, staffed by people with filleting skills and a strong knowledge of seafood, and the chain buys from both large and small fish processors at many ports around the country.
Two years ago Morrisons dramatically increased the number of stores by acquiring the Safeway supermarket group in a £3billion move that led to more than a little upheaval within the organisation. Like Sainsbury’s, the private equity interest in Morrisons would be more for its huge land bank around the country rather than as a grocery business.
When asked about private-equity interest in Morrisons, chairman Sir Ken replied: Ive no comment to make. But if I fell over them I wouldnt know them.
City insiders were saying this week that Morrisons was now one of the main targets among a number of private equity companies. The UK retail industry is regarded as an attractive proposition because of its large land holdings and its huge growth potential. However, it could be several weeks – perhaps months – before a formal bid is made. Shortly before Easter, Morrisons announced a £450million revamp of its business with a new logo and a increased focus on fresh and healthy food, which included fresh fish with a brand new slogan “Fresh for you everyday” to replace the dated “More reasons to shop at Morrisons”.
Analysts at JP Morgan said last month that the failed bid approach for Sainsbury’s had changed the landscape for private equity deals and left Morrisons looking like more of a target. In March, Morrisons was said to be considering selling up to £1billion worth of stores in an attempt to defend itself from potential private equity takeover approaches.
The private equity appetite for British firms in the food and seafood business has continued with relentless hunger since Permira acquired Birds Eye and its European sister Iglo last year. But it has been a development dogged by huge controversy.
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