Stable retail businesses such as Morrisons are being eyed by overseas investors due to a drop in the price of sterling driven by ongoing uncertainty around Brexit, according to analysts.
Morrisons is considered a prime candidate for a potential takeover bid from an overseas private equity firm, as its share price continues to waver and the weakness of the pound against overseas currencies makes deals cheaper.
Yesterday, pub and brewery chain Greene King was snapped up for £2.7bn by Superdrug owner and Hong Kong-based billionaire Li Ka-shing, and some analysts believe that more overseas investors will look to move into the UK market.
Head of research at Shore Capital Clive Black said: “We are not suggesting Morrisons has had an approach, but sure as eggs are eggs, there are a vast array of investors looking at stable UK businesses at the moment.
“We’ve seen a lot already – Greene King, Just Eat, Dairy Crest – and that won’t be the end of it.”
Morrisons has seen its share price fall by more than 30 per cent over the last year, which, combined with its large freehold property estate and relatively low debt pile, could make it an attractive target for overseas investors.
“[Morrisons is] a big company, as is Asda, but international private equity houses have got enormous sums of money. As the value of sterling falls, trophy assets in the UK come into vogue,” Black said.
The comments come after Morrisons found itself lagging behind its big-four supermarket rivals in the most recent Kantar grocery industry data, published yesterday.
Sales at the retailer were down 2.7%, while its market shared edged down by 0.2% – from 10.3% to 10.1%.
For the supermarket sector, hot weather last year and low like-for-like price rises kept a lid on growth in the 12 weeks to August 11. Inflation over the period was 0.9%.
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