Morrisons boss under pressure as buyout rumours swirl
Morrisons shares rallied in early London on speculation to take the business private
Wednesday 12 February 2014
Pressure was mounting on Morrisons’ chief executive Dalton Philips today after revelations that the supermarket’s founding family has approached some of the biggest private equity groups to discuss turning the business private again.
However, Sir Ken Morrison, said he had no knowledge of the negotiations, likely to be conducted by younger generations of the trust which controls the family’s 9 per cent stake.
“I was quite surprised to see it,” he said of a Bloomberg report that Morrison family members had been in touch with buyout groups including CVC, Apax Partners and Carlyle. “They [the family] will all have considered views on the performance of the business. I am honorary president, which means I don’t have a vote, I am not consulted and I don’t have views. It’s not a job that I relish, you know.”
The UK’s fourth-biggest supermarket chain had a dreadful Christmas and had to issue a shock profit warning, while the chain continues to lose thousands of customers as it plays catch up with an online offering and convenience stores. Sir Ken said trading had been “very unsatisfactory”.
The private equity groups have all been approached by the family to raise enough cash for a £7 billion buyout. But any deal may need the involvement of more than one private equity group. Carlyle and CVC are in talks about working together, reports suggest, while Apax is thought to have walked away.
Morrisons has already been under pressure from hedge fund Elliott Management, an activist shareholder, which called on the company to start selling some of its 453 freehold stores and return the cash to investors.
A similar approach in-volving a sale-and-leaseback plan is likely to be put forward by any family and private equity deal — which would go against the founding principles of Sir Ken, the 82-year-old son of the founder, who also ran the company for 40 years.
Sir Ken has always said Morrisons should not sell its freeholds, as this gives the company more control over the running of the business, and it should remain debt-free.
Morrisons’ problems were laid bare when latest data showed sales had fallen 2.5 per cent, with market share also down, in the 12 weeks to February 2. It is understood Morrisons itself has not yet been approached over a deal.
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