Morrisons founding family shopping for buyers

Private equity funds are cautious about the struggling supermarket.

by Rachel Savage
Last Updated: 08 Dec 2014

Morrisons’ founding family have sounded out private equity funds about taking the supermarket chain private, after reporting rubbish Christmas sales and finally launching online shopping with Ocado last month, a decade after their main rivals.
 
The family, which owns 9-10% of the retailer, approached CVC Capital Partners, Carlyle and Apax to weigh their interest a potential buyout, Bloomberg said citing anonymous sources. CVC and Carlyle have discussed working together on a deal, although they may not go ahead and show the money, while Apax has apparently decided against the idea.
 
The funds aren’t sure about the deal, due to Morrisons’ slow sales growth and the size of the deal, the sources said. They said the deal would value the supermarket at more than £7bn, which would be the biggest buyout since Boots was bought off the stock market in 2007 for around £12.2bn.
 
Morrisons has struggled to gain ground recently, after trailing rivals like Tesco and Sainsbury in launching online shopping and opening convenience stores. Sales were down in the crucial Christmas period, although none of the big supermarkets had a particularly merry festive season, with Aldi and Lidl snapping up discount shoppers and Waitrose creaming off sales at the top of the pile.
 
The supermarket’s share price has suffered too, slipping 9.7% in the last 12 months. Shareholders welcomed the news of the possible deal, sending the shares up as much as 5% at the start of the day, although they were up around 2% in mid morning trading.
 
Analysts weren’t so sure about the potential buyout. ‘With Morrison in such a distressed position, it’s not a surprise that some may be assessing an alternate route for the company,’ Exane BNP Paribas analyst Andrew Gwynn told Bloomberg.
 
‘In the past however, the family has been extremely conservative, so going down the private-equity route would be a fairly major departure from that.’
 
‘We are skeptical that a deal is likely,’ said James Anstead, a Barclays analyst. ‘Potential buyers will likely be nervous of whether the business is fundamentally broken.’
 
A spokesman for Morrisons declined to comment, but emphasised that the company does not speak for the family, none of whom are on the supermarket’s board. The private equity funds also kept mum. After BlackBerry’s plans to go private crumbled publicly and messily, they’re all likely to want to keep it on the down low.

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