Shares in the British supermarket chain Morrisons rose 11% as investors appreciated the possibility of bidding for the company after a third US privately owned company said it was considering an offer
LONDON – Shares of British supermarket chain Morrisons rose 11% on Monday as investors appreciated the possibility of bidding for the company, after a third U.S. investment company said it was considering an offer.
Private equity firm Apollo Global Management said it was “in the preliminary stage of assessing a possible offer for Morrisons” and that a formal approach has not yet been adopted.
“There can be no certainty that any offer will be made, nor in terms of the conditions under which such an offer can be made,” Apollo said in a statement.
The statement comes after the trader said that he agreed to take over 6.3 billion pounds (8.7 billion dollars) from a group of investors led by the company Fortress Investment. When debt is added to that, the offer is worth £ 9.5 billion.
Morrisons’ share price rose more than 11% to about 266 pence on Monday morning on the London Stock Exchange after Apollo’s statement.
The company, which employs around 110,000 people, operates 497 stores and 339 petrol stations across the UK
The current share price is higher than estimated from the agreed offer of the firm and its partners, the Canadian Pension Plan Committee and Koch Real Estate Investments. This will see shareholders receive 252 pence per share plus a special dividend of 2 pence.
The deal came nearly two weeks after private joint-stock company Clayton, Dubilier & Rice acceded to £ 5.5bn, which the Morrisons board rejected because it said it had underestimated the company.
Neil Wilson, chief market analyst at Markets.com, said there could be several more offers to a potential “knockout” of about 280 pence a share.
“We have talked quite regularly about the amount of private capital waiting for British companies, which are cheap compared to their peers,” he said.
Private companies usually buy undervalued companies and then look for ways to reduce costs and increase profits before selling them at a profit. It is widely believed that British property is cheaper than it would otherwise be as a result of Britain’s departure from the European Union and the coronavirus pandemic.