The UK’s largest asset manager has warned that private equity firms must not be allowed to acquire Wm Morrison for the “wrong reasons”, such as profiting from the supermarket chain’s property portfolio or “levering the company up with debt” (The Financial Times £, The Guardian, The Daily Mail). The proposed £6.3 billion takeover of Morrisons faces opposition in the City after leading shareholders raised concerns about the private equity-led deal amid expectations of a bidding war (The Times £). Morrisons is at risk of being loaded with debt and stripped of its property portfolio, one of the City’s of London’s biggest institutions has warned in an unusual public rebuke to the buyout consortium that has agreed to acquire the supermarket in a £9.5bn deal (The Telegraph).
Ben Marlow in The Telegraph writes: “Aside from how carefully-worded those statements are, the suggestion that these investors can be trusted to honour such loose pledges simply doesn’t stack up. Unless they are legally binding, promises made in the heat of a takeover battle in an attempt to calm political opposition and media scrutiny, rarely stand the test of time.” (The Telegraph)
The Guaridan’s Nils Pratley comments: “Note that Fortress’s commitments to good behaviour, covering industry-beating pay rates for staff and so on, were “statements of intention” rather than binding “post-offer undertakings” that can be enforced through the courts by the Takeover Panel, the City policeman on bids.” (The Guardian)
The FT’s Lex column writes: “The big question is whether another US buyout group will include a sale-and-leaseback in its calculations. It might then easily outbid Fortress. Sensitive UK public opinion could, at the same time, sour towards a buyout at any price.” (The Financial Times £)
Sky News’ Ian King suggests Fortress’ commitments have set a benchmark for other bidders: “Those values might yet be threatened, though, by a would-be buyer going hostile – in other words, making an appeal to Morrisons shareholders over the heads of the board… Institutional shareholders talk increasingly about sustainability. A hostile bid for Morrisons would be an acid test of that.” (Sky News)
City fund managers are questioning the price. “Do they [the investors] go for a fair price at Fortress’s 254p and commitments or do they want this to get to a really high price like 299p and weak commitments? What do they think is fair value for this asset?” one senior banker said. (The Times £)
Alistair Osborne in The Times writes: “Yes, the board has caved in too easily. But for that, short-termist, governance-obsessed investors have themselves to blame. They’ve proved happier to stage a 70% revolt over the pay of the chief executive, David Potts, than put their money behind his turnaround. The upshot? A share price that’s gone nowhere since he started in March 2015.” (The Times £)
The Mail’s Alex Brummer suggests the Morrisons board should have fought harder against the approach: “Morrisons needs a Stuart Rose. Chairman Andy Higginson and the board allowed themselves to be sweet-talked into accepting the bid from Softbank and Koch Retail-backed Fortress with loose commitments to maintain Ken Morrison’s legacy. Instead, they could have repelled the swarming private equity bidders and made the case for the Bradford-based supermarket group to go it alone.” (The Daily Mail)
The FT’s Bryce Elder writes: “The accepted offer on the table relies not on financial engineering or asset stripping but on the likelihood that supermarket prices will now start to rise and life will get more difficult for the average British shopper. Any higher proposal will use that assumption as a starting point. It all makes for a desultory measure of the efficiency of public markets.” (The Financial Times £)
Morrisons saw its share price soar on Monday after private equity giant Apollo Global Management revealed it could join the takeover battle for the supermarket (The Daily Mail). Apollo Global said it was considering the move, but no approach has yet been made to Morrisons (The BBC).
Sainsbury’s is launching a fresh round of price cuts in the latest onslaught against its rivals as supermarkets battle it out to win customers. (The Telegraph)
Ministers have admitted that footfall across Britain’s high streets may never recover to pre-pandemic levels as Boris Johnson unveiled plans to lift restrictions in shops, restaurants and pubs on England’s long-awaited freedom day later this month. (The Telegraph)
Champagne is one of the most protected products in the drinks industry – but a new law signed by Vladimir Putin makes the counter-claim that the word can be used only for Russian wine (Sky News). In a provocative move on Friday, Vladimir Putin signed legislation requiring all non-Russian producers to mark their products in Russia as “sparkling wine” on the back of every bottle, including some of the world’s most famous and expensive bubbly (The Guardian).
The economy is bouncing back at a record rate but the main problem facing businesses is a shortage of staff, experts have warned. (The Daily Mail)