MARKET REPORT: Morrison’s bidding war sends shares to their highest level since 2013 at 273p
Shares in Morrisons reached its highest level since 2013 yesterday as investors prepared for a bidding war between two private equity groups.
Clayton Dubilier & Rice were set to make a new offer before Monday’s 5 p.m. deadline after the grocer’s board backed a 254 pence bid from a rival consortium led by Fortress.
Shares rose 2 percent, or 5.4p, to 273p as investors anticipated another jump, but the rising price has raised fears that a split from Morrisons is inevitable if the price rises further.
Shares in Morrisons hit their highest level since 2013 yesterday as investors prepared for a bidding war between two private equity groups
Analysts at Bernstein said it “has struggled to see returns from current supply without significant asset sales,” while further hikes will only increase pressure to sell its food factories, warehouses, supermarkets and gas stations.
Last week, shareholders’ disagreements against Fortress’ offer grew as investors labeled the offer too low and asked what expertise or strategy the consortium will bring to the table. CD&R will reflect the strategy of the Issa brothers at Asda by expanding Morrisons’ convenience network at the 900 petrol stations owned by the Motor Fuel Group.
The tense bidding war also led to suggestions this weekend that Amazon, which has a supply deal with Morrisons, could be waiting in the wings to pounce – a move that would electrify the race and even the entire UK supermarket market. The rise reflected a strong day in London markets, with the FTSE 100 blue-chip index rises 0.7 percent, or 49.42 points, to 7081.72 and the FTSE 250 up 1.1 percent, or 259.84 points, to 23,208.67.
The session was dominated by merger and acquisition activity after defense giant Meggitt received a £6.3 billion bid from US rival Parker-Hannifin. Meggitt shares gained 56.7 percent, or 265.9p, to 735p, spurring other defense companies, or those associated with the defense industry, to move higher. engine maker Rolls Royce 3.8 percent or 3.77p added to 103.48p, BAE systems rose 1.1 percent, or 6.6p, to 582.6p and Melrose finished 5.2 percent, or 8.3p, at 168.4p.
STOCK: ESCAPE HUNT
Shares in Escape Hunt fled early gains encouraged by a trading update. Shares rose during the day but ended up 4.3 percent, or 1.5p, at 33.5p, following the update from the operator of ‘escape rooms’, a sort of Crystal Maze experience for paying gamblers.
Trade in the ten weeks to the end of July was encouraging, the company said, with capacity utilization returning faster than expected after the lockdown. As a result, sales and profits for the period were above management’s expectations. Chief executive Richard Harpham said they are optimistically looking ahead.
In the energy giant of the utility market SSE sold its 33.3 percent stake in Scotia Gas Networks for £1.22 billion. The company saw its shares rise 1.3 percent or 18.5 pence to 1,464 pence. Under the deal, SSE will sell its stake in the company to a consortium made up of existing SGN shareholder Ontario Teachers’ Pension Plan Board and Brookfield Super-Core Infrastructure Partners.
It is the latest sale in SSE’s major divestment program launched last June. The company has now generated more than £2.7 billion in revenue from its non-core assets, enabling it to increase its investments elsewhere in the company.
The merger Monday was well underway and showed no signs of slowing down as Cambridge antibody firm Abcam picked up a California drug discovery biotech for £245 million. Biovision has provided Abcam with tools for life science research for 18 years. Biovision makes biochemical and cell-based tests for biological research and provides companies with antibodies and enzymes. It has done Covid-19 testing.
abcam shot up 4.9 percent or 67p to 1425p. But weaker-than-expected economic data from around the world pushed oil prices down. Data showed that Chinese manufacturing activity growth slowed sharply in July. While in the UK, production grew at a slower pace last month than in May and June, due to the large number of workers in self-isolation.
The IHS Markit PMI fell to 60.4 from all-time highs of 65.6 in May, with any figure above 50 representing growth. As a result, Brent Crude fell 4 percent to $72.83 a barrel, though BP (increase of 0.2 percent, or 0.55p, to 289.75p) and Shell (up 1 percent, or 14p, to 1433.8p) managed to hold out and squeeze out gains.