The Morrisons supermarket chain might have to break up if a planned £6.3billion takeover deal goes through.
A sale of Morrisons to private equity owners could trigger a break-up of the supermarket chain, analysts in the City have warned.
The supermarket’s management has provisionally greed to a £6.3 billion takeover bid from a consortium of investment groups.
The offer, led by Softbank-owned Fortress which has partnered with Canada Pension Plan Investment Board and Koch Real Estate Investments, will see shareholders receive 252p per share plus a 2p special dividend.
But city analysts Bernstein said the new owners would need to sell off part of the supermarket to reclaim some cash, according to The Grocer.
Bernstein said buyers would struggle to make a profit “without significant asset sales”.
As well as the supermarkets themselves, Morrisons owns petrol stations, food factories and depots.
A second group of analysts, William Woods, said if the price of Morrisons goes up any further then this could mean the buyers have to sell off bits of it.
The all-cash offer can only go through if Morrisons shareholders agree to it.
The offer represents a 42% premium on the Morrisons share price before it was announced that the supermarket had rejected a takeover proposal from New York-based firm Clayton, Dubilier & Rice (CD&R) in June.
But last week big Morrisons shareholders spoke out about the mooted £6.3billion takeover deal.
The shareholders, JO Hambro, Silchester and M&G own about 20% of Morrisons, but said the price wasn’t high enough and had worries about how fast the sale was moving.
Fortress needs 75% of Morrisons shareholders to agree for the deal to go through at a meeting due on August 16.
But another bid might be coming from CD&R, whose 230p-a-share bid was turned down in June.
It has until August 9 to unveil a new bid.
Morrisons has been approached for comment.
The Fortress deal has been approved by Morrisons management.
In July Morrisons chairman Andrew Higginson said: “The Morrisons directors believe that the offer represents a fair and recommendable price for shareholders which recognises Morrisons’ future prospects.
“Morrisons is an outstanding business and our performance through the pandemic has further improved our standing and enabled us to enter the discussions with Fortress from a hard-won position of strength.”
Morrisons is testing out stores with no checkouts or staff in a move that would rival Amazon.
The supermarket is reported to be working with US technology company AiFi, which uses cameras to track the objects customers pick up and put in their baskets.
The technology then sees shoppers charged through a smartphone app – meaning they don’t need to go to a till to pay.
Morrisons is said to be testing the concept at its Bradford head office store, which is open to thousands of staff.
Around 480 Morrisons supermarkets were once owned by Safeway’s, which Morrisons bought in 2004.
However the company had to shut 50 of the stores due to competition rules.