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”.