Morrisons rejects £5.5bn takeover bid – then shares spike

Shares in Morrisons surged more than 30%, after the supermarket turned down a £5.5bn takeover bid from a US private equity firm.

The move sparked investor demand and spiked shares by 30%, making the Bradford-based chain the top FTSE 250 riser as soon as trading opened on the morning of June 21st.

Shares also rose in the rest of the sector, as traders thought that other supermarket groups could become targets of private equity interest. Sainsbury’s and Ocado went up 3.5%. Tesco shares rose 1.3% and Marks & Spencer was up 3%.

Bidding war?

The private equity firm Clayton, Dubilier & Rice has until mid-July to make another offer or walk away, meaning it could table a more lucrative offer to convince Morrisons bosses to recommend that investors sell the business. CD&R counts Sir Terry Leahy, the former Tesco chief executive, as a senior adviser.

Morrisons walked away from the deal, claiming the PE firm had significantly under-estimated the value of the UK’s fourth largest supermarket chain.

Other bidders, including rival private equity firms or even Amazon, could put their hat in the ring.

Neighbourhood Retailer

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