(Adds no comment from Apax, analyst, investor comment, updates
LONDON Feb 12 The founding family of Britain's
No. 4 grocer, Wm Morrison Supermarkets, has contacted
buyout firms to gauge their interest in taking the business
private in what could be the biggest UK retail purchase in seven
years, Bloomberg reported.
The Morrison family, which holds about 9.5 percent of the
supermarket, had approached private equity firms CVC Capital
Partners, Carlyle Group and Apax Partners,
although the latter had decided not to pursue a deal, the report
said, citing people with knowledge of the matter.
Shares in the over 400-stores Morrisons, down 18 percent
over the last six months on concerns over the grocer's weak
trading, rose as much as 5.4 percent on Wednesday.
They were up 0.8 percent at 239 pence at 1206 GMT as
analysts and shareholders said they were sceptical that a deal
The report said the Morrison family has so far been unable
to find a buyout partner due to the size of any potential deal
and the grocer's poor performance after a sharp fall in
like-for-like sales over Christmas.
Bloomberg said a buyout of Morrisons would exceed 7 billion
pounds ($11.5 billion) and require a group of funds to work
together. At that price, a deal 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
Former chairman and chief executive Ken Morrison, whose
father founded the company in 1899, holds the honorary post of
life president of Morrisons but has not had any involvement in
the running of the company since his retirement in 2008.
Morrisons' shareholders and retail analysts were doubtful
that a deal would happen.
"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," said analysts at Barclays.
"Potential buyers will likely be nervous of whether the
business is fundamentally broken," they said.
One UK based institutional shareholder of Morrisons said it
was unsure how the firm would work any better in private hands.
"The property asset backing could be an angle, but how that
could be realised, and how robust that asset value is in the
face of lacklustre trading, is uncertain," it said.
Bradford, northern England based Morrisons' late entry into
both online grocery and local convenience stores, the sector's
two fastest growing channels, as well as intense competition
from discounters Aldi and Lidl, has
dented its market share and profits.
Last month the firm revealed it had endured a poor Christmas
despite it having talked up its prospects in November. Its
like-for-like sales fell 5.6 percent, excluding fuel, in the six
weeks to Jan. 5 and it said year profit would be towards the
bottom of the range of analysts' expectations.
Morrisons is also facing calls from activist investors,
including U.S. hedge fund Elliott Associates, to radically
restructure its property portfolio.
The grocer plans to detail the result of a property review
when it publishes 2013-14 results on March 13 but has said the
majority of its core estate will remain freehold.
Analysts said if Morrisons did go private it would likely
slash capital expenditure and consider store disposals.
($1 = 0.6067 British pounds)
(Reporting by James Davey; additional reporting by Clare
Hutchison, Chris Vellacott, Freya Berry and Neil Maidment;
editing by Kate Holton and Louise Heavens)