Morrisons shares surge 30% after it spurns £5.5bn takeover offer

Shares in supermarket group Morrisons have surged by more than 30% after it rebuffed a takeover off worth more than £5.5bn.

The rise, which comes after Sky News this weekend revealed details of the offer from US buyout giant Clayton Dubilier & Rice (CD&R), added more than £1bn to the group’s market value.

Rivals Sainsbury’s and Tesco also rose, adding 4% and 2% respectively, as investors digested the implications of the approach for the wider supermarket sector.

Meanwhile, the possibility of another one of Britain’s supermarkets being swallowed up in a private equity deal – after Asda was sold to a consortium led by the billionaire Issa brothers – has raised concerns from Labour.

On Saturday, Morrisons confirmed CD&R’s approach, at 230p a share, but said that “significantly undervalued Morrisons and its future prospects” and that it had rejected the offer last week.

But the Financial Times reported that the private equity firm was set to push ahead with its pursuit while there was also speculation that the offer could spark a bidding war with other private equity firms – or Amazon, which already has an online partnership with the supermarket.

The stock had closed at just over 178p – giving it a market value of just over £4.3bn – at the close of trading on Friday.

On Monday it climbed to more than 236p in early trading, taking the value to more than £5.7bn.

Nick Bubb, an independent retail analyst, said: “As noted by the FT today, CD&R aren’t going away and we suspect a deal can be done in the 250p-260p area, so it should be a lively day for the sector on the stock market today, with an additional focus on the bid potential for Sainsbury and Tesco as well.”

The offer for Morrisons comes after the UK competition watchdog last week approved the takeover of rival Asda by a consortium comprising billionaire petrol station entrepreneurs Mohsin and Zuber Issa and private equity firm TDR Capital.

Meanwhile in April, Czech billionaire Daniel Kretinsky raised his stake in Sainsbury’s to almost 10%, fuelling speculation about a possible bid.

Seema Malhotra, Labour’s shadow minister for business and consumers, said Britain’s supermarkets had “stepped up to serve communities during the pandemic” and that the needed “owners that put the long-term interests of the business and its employees first”.

She added: “When Debenhams went bust we saw private equity firms walk away while employees lost their jobs and staff who have paid into the pension scheme were left out of pocket.

“Too often dodgy private equity firms load the companies with debt and leave while pocketing the dividends. This has to end.”