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Morrisons takeover could trigger breakup, analysts warn

A spate of recent private equity interest in the UK's supermarkets has prompted the chair of the parliamentary business committee to question whether the competition watchdog has sharp enough teeth to deal with such bids.
Analysts at Bernstein said they “struggle to see” how Morrisons’ assets would not be stripped if the takeover proceeds at the current offer price

Analysts have warned that British supermarket chain Morrisons could be broken up if it is taken over by buyout firms.

Analysts at Bernstein said they “struggle to see” how Morrisons’ assets would not be stripped if the takeover proceeds at the current or a higher offer price.

Read more: Morrisons: Singapore’s wealth fund GIC joins Fortress’ £6.3bn takeover deal

An increase in the price would “put further pressure on potential new owners to sell off additional assets — petrol stations, factories, warehouses and stores”.

The news was first reported by The Times.

Morrisons is currently the target of a £6.3bn acquisition by a Fortress-led consortium. The Singapore sovereign wealth fund, GIC, joined the group this week, while Apollo, a fellow buyout firm, is in talks to join the group’s ranks.

The consortium has made assurances over protecting Morrisons’ assets, saying it does not anticipate any “material store sale and leaseback transactions”.

Morrisons, the UK’s fourth largest supermarket, owns a large proportion of its assets, including petrol stations and real estate, outright, which is rare in the retail industry.

Read more: Morrisons’ biggest shareholder refuses to back £6.3bn Fortress-led takeover bid

The supermarket’s largest shareholder this week said it will refuse to back the Fortress takeover bid.