Analysts believe Morrisons could have everything to play for if two of its main rivals combine, thanks to the stores they would be forced to offload following the Competition and Markets Authority’s probe.
According to The Mail, Morrisons is believed to be considering a bid for the stores Sainsbury’s and Asda could be forced to sell if a merger between the two supermarkets were to take place.
Some 138 of Sainsbury’s stores in the UK are within a mile of an Asda store, raising potential competition concerns once they are owned by the same company.
Ten of those stores are less then 200 yards apart, including those in York, London’s Stamford Hill and Stockport.
While Sainsbury’s chief executive Mike Coupe has been keen to quash competition concerns, arguing that there are rival shops nearby, it’s now thought between 250 and 300 stores could be sold off to appease the Competition and Markets Authority’s concerns.
“We believe Morrisons could be well positioned to benefit from the proposed merger, picking up stores at a good price,” HSBC’s head of consumer retail research David McCarthy told The Mail.
Meanwhile head of research at Shore Capital Clive Black has said a sale of Sainsbury’s and Asda’s stores would give Morrisons a long-awaited chance at expansion into London and the South East, where it has struggled to compete in the past.
“We stand by the view that Morrisons is likely to be the kingmaker of this deal,” Black said. “(It) is probably best positioned to be offered the opportunity to acquire stores if it wants them.”
The news comes after Morrisons this morning revealed a 29 per cent fall in pre-tax profits to £142 million for the six months to August 5, down from £200 million during the same period last year.
This was primarily attributed to a £51 million net adjustment, including a previously announced bond tender offer.
Revenue for the period was up 4.5 per cent to £8.8 billion.