// Morrisons saw its share price increase by around a third soon after it rejected a £5.5bn takeover bid
// Shares in Sainsbury’s rose by 4.4%, Ocado had gained around 3%, and Tesco was trading up 2.7%
// Speculation is rife that another bid is on its way for Morrisons, and other grocery giants might also draw interest from big investors
Shares in the UK’s biggest supermarkets soared earlier this morning after Morrisons rejected a £5.5 billion takeover bid from a US private equity giant.
Morrisons saw its share price increase by around a third soon after markets opened in London on Monday morning following a weekend of speculation around the future of the grocery giant.
On Sunday, Morrisons said it had been sent an “unsolicited, highly conditional, non-binding proposal” from Clayton, Dubilier & Rice (CD&R), a New York-based private equity firm.
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It rejected the offer after the board “unanimously concluded that the conditional proposal significantly undervalued Morrisons and its future prospects”.
Morrisons was among grocers to post lower annual profits after being hit by high pandemic costs.
However, this has not been enough to put off prospective bidders and on Monday it appeared that shareholders thought CD&R – or perhaps another suitor – might return with a higher bid.
The original offer was for 230p per share, while shares were selling for 237p.
It means that investors are likely to be betting that a second bid, higher than 237p, will be on its way shortly – a practice known as risk arbitrage.
In Morrisons’ wake, shares in Sainsbury’s rose by 4.4 per cent, Ocado had gained around three per cent, and Tesco was trading up 2.7 per cent shortly after markets opened in London.
The announcement of the bid sparked speculation that these grocery giants might also draw interest from big investors who have the resources to take the supermarkets private.
Any deal for Morrisons or the other supermarkets would follow the £6.8 billion buyout of Asda by the billionaire Issa brothers, which was approved by the competition watchdog last week.
with PA Wires
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