Morrisons have rejected the offer from Clayton, Dublier and Rice
The Morrisons share price (LON:MRW) surged by 34% on Monday as an American private equity company put forward a £5.5bn bid for the supermarket.
The FTSE 250 company did not entertain the offer from Clayton, Dublier and Rice, although shareholders are expecting an improved offer in the near future.
The offer buoyed the FTSE 250 index, as the Morrisons share priced finished the day valued at 240.2p.
“After a year of feeding the nation Morrisons looks like it could be the subject of a feeding frenzy after turning down a takeover bid. Shares in the supermarket have ridden the roller coaster of anticipation today ending up 34.6% at 240.20, giving the FTSE 250 a much-needed boost,” said Danni Hewson, AJ Bell financial analyst.
The news also impacted thee share prices of other major supermarkets.
“Morrisons’ rival stores seemed to be living vicariously with investors contemplating the future of the entire sector which increasingly seems to be undervalued with major changes to business practices possibly overlooked by some because of covid costs. Ocado and Sainsbury topped the day’s FTSE 100 risers,” Hewson added.
The NewYork-based company now has a period of four weeks to improve its offer.
Buyout firms have turned their attention to the UK’s supermarkets, which have seen their sales jump, although this has not been reflected in their respective stock values.
There has been some concerns regarding the takeover from the perspective of competitiveness. The Commons business, energy and industrial strategy committee will ask the Competition and Markets Authority to get assurances from Clayton, Dublier and Rice in the event of a deal taking place.
Morrisons owns 85% of close to 500 stores and has interests in farming and food production. Analysts argue that a number of factors, including its sizeable property portfolio, are not fully taken into account when considering the company’s share price.
According to The Times, research at Quest, suggests that Morrisons shares are worth 295p.