Supermarket sweep: Morrisons taken private
Last weekend’s auction proved ‘strangely underwhelming’
After an intense four-month battle, “we were expecting the mother of all food fights” at last weekend’s auction for Morrisons, said Ben Marlow in The Daily Telegraph. It proved “strangely underwhelming”. Clayton, Dubilier & Rice (CD&R) beat its US private-equity rival Fortress by “just 1p-a-share” – buying Britain’s fourth-largest supermarket for around £10bn (including £3bn in debt). It’s a triumph for former Tesco chief Sir Terry Leahy, who is tipped to return to a British grocer a decade on as Morrisons’ new chairman. But the outcome for other stakeholders looks less rosy. Morrisons’ debt “will more than double” just as a supply crisis is swamping the country, placing CD&R “under intense pressure” to give the supermarket “the full private-equity treatment”.
In fairness, CD&R does enjoy a better reputation “as a builder of companies” than most of its peers, said Nils Pratley in The Guardian. But this is “still a leveraged buyout that relies on debt gymnastics”. Ominously, its “behavioural pledges” – covering asset disposals, staff pay and treatment of suppliers – are “vague” and last for only 12 months.
Given the hard work needed “to justify this deal”, loser Fortress might even be feeling “a little relieved”, said Lex in the FT. Still, the price paid for Morrisons – a “chunky” 61% premium on its “undisturbed” share price – “highlights the frenzied interest in Britain’s supermarket sector”, said Oscar Williams-Grut in the London Evening Standard.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Morrisons follows Asda as the second big grocer to fall into private equity hands this year. Who’s next? Shares in Sainsbury’s, Ocado and Tesco have surged amid speculation they might also be targeted. Tesco’s near £20bn market cap was once thought to be insurmountable, but “in the current climate”, rule nothing out.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
-
5 hilariously spirited cartoons about the spirit of Christmas
Cartoons Artists take on excuses, pardons, and more
By The Week US Published
-
Inside the house of Assad
The Explainer Bashar al-Assad and his father, Hafez, ruled Syria for more than half a century but how did one family achieve and maintain power?
By The Week UK Published
-
Sudoku medium: December 22, 2024
The Week's daily medium sudoku puzzle
By The Week Staff Published
-
Diversity training: a victim of the 'war on woke'
Talking Point More and more US companies have phased out corporate DEI initiatives, and the incoming Trump administration is likely to fuel the cultural shift
By The Week UK Published
-
Volkswagen on the ropes: a crisis of its own making
Talking Point The EV revolution has 'left VW in the proverbial dust'
By The Week UK Published
-
The World Bank and the IMF: still fit for purpose?
In the Spotlight Washington meeting has renewed focus on whether 80-year-old Bretton Woods 'twin' institutions are able to tackle the challenges of the future
By The Week UK Published
-
Post Office: still-troubled horizons
Talking Point Sub-postmasters continue to report issues with Horizon IT system behind 'one of the worst miscarriages of justice in British legal history'
By The Week UK Published
-
The UK's national debt: a terrifying warning
Talking Points OBR's 'grim' report on Britain's fiscal outlook warns of skyrocketing spending, but 'projection' is not a 'forecast'
By The Week Published
-
Copper coins: are they doomed?
Talking Point Treasury says no new 1ps and 2ps needed due to declining use – but would we really miss them?
By The Week UK Published
-
Shein: could the year’s mega-IPO fall apart at the seams?
Talking Point Latest hitch is a pre-float 'security review' that could deter potential investors
By The Week UK Published
-
Labor market strong as inflation sinks
Feature And more of the week's best financial insight
By The Week US Published