Morrisons tops supermarket takeover talk

By Nicholas Robinson contact

- Last updated on GMT

Morrisons is 'prime taget for takeover' says analyst
Morrisons is 'prime taget for takeover' says analyst

Related tags: Supermarket, Grocery store

Morrisons has refused to confirm or deny reports it could be in buyout talks after its shares spiked by 5%, following speculation of a UK supermarket takeover by a South African businessman.

However, a Morrisons spokesman said: “We don’t comment on speculation.”

The Bradford-based supermarket was most at risk of a takeover or acquisition​, Julian Wild, head of the food team at Rollits solicitors, told FoodManufacture.co.uk in June.

The retailer’s shares rose by 7.5p to 170p after the South African businessman Christo Wiese told the Daily Telegraph ​he had considered expanding his UK Brait investment arm into the UK supermarket sector.

“The UK is extremely competitive, but I can assure you it is as competitive in South Africa if not more,” ​he told the publication.

‘Same challenges’

Wild predicts Morrisons takeover

“A merger or acquisition looks a strong possibility at some stage, as the big four struggle for growth and are eating each other’s lunch … eventually something has to give.”

  • Julian Wild, Rollits Solicitors

“We South Africans find it very easy to do business in the UK; it is similar and it has the same challenges.”

UK Brait already has a 19% stake in the frozen grocery retailer Iceland and owns the high-street fashion firm New Look and the gym chain Virgin Active.

Wild said in June: “A merger or acquisition looks a strong possibility at some stage, as the big four struggle for growth and are eating each other’s lunch … eventually something has to give.”

Sainsbury was also highlighted by Wild as a business vulnerable to a merger or acquisition, talk of which followed the UK supermarket’s difficulty in dealing with the growth of the German discounters Aldi and Lidl.

“For me, JS ​[Sainsbury] and Morrisons are the most ‘vulnerable’, but, obviously, both are big mouthfuls and both have pros and cons. The UK is a finite market,” ​he said.

Pre-tax profits down

Morrisons posted pre-tax profits down 52% to £345M for the full-year to February 1, and was one of the supermarkets worst hit by the growth of the discounters.

What is UK Brait?

  • 19% stake in Iceland
  • Owns New Look
  • Owns Virgin Active
  • UK investment arm of South African businessman Christo Wiese

However, ceo David Potts managed to boost Morrisons’ fortunes since taking over​ in March. The retailer boasted the largest sales growth out of the big four supermarkets in the 12 weeks to June 21.

Sales increased by 0.6% for the period, which was the first time Morrisons experienced such a boost since December 2011.

As a result of the sales growth, Morrisons’ market share rose by 0.1% to 11%, according Kantar Worldpanel head of retail and consumer insight Fraser McKevitt.

“Last seen in November, the return to marginal decline across the grocery market reflects both failing prices and only steady volume growth,” ​he said.

Related topics: Ambient foods

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