Skip to main content

Sainsbury’s and Morrisons vulnerable to takeover approach from private equity firms

| Research tools

Morrisons and Sainsbury’s are “vulnerable” to a return to private ownership, according to a senior grocery analyst. .

Speaking to trade magazine Retail Week, Cantor Fitzgerald analyst Mike Dennis said the two supermarkets could be attractive takeover targets for private equity firms because their share prices have fallen to their lowest levels for 20 years amid the major structural changes taking place in the industry. He pointed out that Morrisons’ market capitalisation is now around £3.8bn with a total market value – if you include pension deficits and debt – of about £6bn. Meanwhile, Sainsbury’s has a £4.8bn market cap and value of £7.6bn.

Dennis said: “You have to say in the last 20 years, these companies are now down to their lowest levels in comparison to their sales and square footage. In my view, they look quite vulnerable. Some of the solutions that are required in this industry would probably be better carried out under a private holding than as a public company.”

The analyst compared the struggles of Sainsbury’s, Morrisons and Tesco to the performance of Asda (in terms of profitability), as well as Waitrose, the Co-op, and Aldi and Lidl, who are all “privately-run or partnership-run with limited amounts of visibility”. He noted: “Interestingly, those are the retailers that seem to be doing better.”

Dennis told Retail Week: “I think retailers, retail management and major shareholders have to sit back and reconsider the whole capital structure and the necessity for a company to be a public company.”

Dennis suggested that Morrisons could appeal to potential investors because it has no major shareholders, while Sainsbury’s - which is 26% owned by the QIA - would remain an attractive proposition to investors because of its “very valuable asset base”. He ruled out any potential moves for Tesco saying any parties interested would find a takeover bid “too big to accommodate”.

Pin It

Related Articles

More Pick n Pay smart shoppers switching points...

Pick n Pay Smart Shopper customers are increasingly spending their points on airtime and data, a popular loyalty reward exclusive for retailer Pick n Pay.

Mr D versus Checkers Sixty60, Woolies Dash, Ube...

By: Staff Writer - MyBroadBand Mr D Groceries has partnered with Pick n Pay stores across South Africa to give shoppers access to more than 27,000 food products at in-store prices – including drinks, meat, snacks, fresh produce, and more.

These are South Africa’s most popular loyalty p...

By: Lynette Dicey - BusinessLive Loyalty programme usage in South Africa has grown from 67% in 2015 to 76% in 2023/2024 across both gender and income categories, says the most recent “South African Loyalty Landscape Whitepaper” by Truth &...

New Research Finds 84% of South Africans Demand...

NSF study shows a significant shift towards ethical consumerism is underway in South Africa, with a majority of consumers calling for clear animal wellness transparency and compliance. 

Take heed of these new retail trends that emerg...

By Karen Keylock | National Retail Services Manager at Nedbank Commercial Banking South African consumers are under financial strain and, consequently, the way they shop has changed. And with further economic uncertainty expected in the coming ye...