Morrisons investors doubt plans for family takeover

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SHARES in Morrisons shot up more than five per cent yesterday on reports that the founding family is to launch a bid to take the listed company back into private hands, but analysts and shareholders poured cold water on the idea and former chairman Sir Ken Morrison said he was unaware of any talks.

The shares eventually closed up just 0.25 per cent, a rise of 0.6p to 237.8p as investors discounted the likelihood of a deal.

The reports claimed that the founding family behind struggling Morrisons has sounded out private equity funds to assess their interest in taking the supermarket private.

The family, which holds about 9.5 per cent of the group, is understood to have contacted CVC Capital Partners, Carlyle Group and Apax Partners.

Apax has decided not to pursue a deal and sources close to the first two said talks were never really serious.

It is understood that the family was unable to find a buy-out partner due to concerns about Morrisons sales growth and the size of the deal.

The group’s market value is more than £5.5bn and any buyout would be worth over £7bn, meaning that a group of private equity firms would have to work together together to fund the deal.

Barclays analyst James Anstead said: “The size of a deal means that it would likely involve more than one firm, requiring a degree of co-operation that would complicate a potential deal.

“Typically buyout firms approach shareholders rather than the other way around, so this aspect of the news reduces the likelihood of a deal in our eyes.

“Potential buyers will likely be nervous of whether the business is fundamentally broken.

“Bear in mind that the family have less than 10 per cent of the shares, so they are far from controlling shareholders.”

If a deal was to go ahead, it would be the biggest purchase of a British retailer since the 2007 buyout of Alliance Boots.

Morrisons, CVC, Carlyle and Apax declined to comment, while the Morrison family could not be immediately reached for comment.

Morrisons shares have lost 18 per cent over the last six months.

Graham Pearce of KPMG

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