Wm Morrison Supermarkets ADR (OTCMKTS: MRWSY) Skyrockets on CD&R Takeover Offer

Wm Morrison Supermarkets ADR (OTCMKTS: MRWSY) popped over 35% on Monday after it pulled up the socks for negotiations with Clayton Dubilier & Rice (CD&R), the U.S. private equity conglomerate. The British supermarket chain Morrison had recently rejected CD&R’s cash offer of 5.52 billion pounds ($7.62 billion), citing it to be “far too low.” Instead, Morrison said that it has an “unsolicited non-binding” proposal in which it expects 230 pence per share price.

Rejection and on-boarding sending shares over the roof

Morrison is again gearing up to negotiate the deal after it had rejected the initial offer from CD&R on Thursday last week. MRWSY was trading for $ $16.97 at the exit hours on Monday, reaching its all-time high. CD&R is still chasing the offer after being rejected on the grounds of undervaluation.

CD&R won’t give up too soon

A consultant and retailing analyst, Nick Bubb said that this rejection will not boo CD&R, and a deal that Morrison floated for 250p-260p could be in focus. There is also an additional focussing on bid potential meant for other largest grocers, Sainsbury and Tesco.

The history and road ahead

Morrison’s shares had remained 5.5% in the previous year. In the London stock exchange, the stock closed for 182 pence on Friday. The group has a market valuation of 4.33 billion pounds. On Saturday, CD&R said that it was still under consideration for a reasonable cash offer that Morrison made. CD&R has until July 17, the time for announcing the intention of making an offer, as per the British rules.

Supermarkets in the U.K. have been known for freehold assets and cash generation. Here has been a rising quest amongst private equities for supermarkets due to this reason. Interestingly, Morrisons also has an agreement of partnership with Amazon. Therefore, there has been a buzz that it could be emerging as its possible bidder too.

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