ALEX BRUMMER: Despite the results, the white flag brigade on the Morrisons board, who surrendered without a real fight, did a good job at the grocer
- It could be good for Morrisons, with £3bn in debt on its balance sheet, to borrow more now
- What happens when the happy years of free and easy money come to an end?
- Poof on honoring late Ken Morrison’s legacy will be nothing unless commitments are extended beyond 12 months
What awaits Morrisons and his wider stakeholder group when it falls into the hands of private equity is a matter of guesswork.
Shareholders and chief executive David Potts may look forward to filling their shoes amid competitive bidding, but there may be little room for optimism for the group’s 110,000 colleagues, the supply chain and those who value financial stability. .
The tragedy is that despite poor results in the first half, the white flag brigade on the Morrisons board, who surrendered without a real fight, did a good job with Britain’s fourth largest grocer.
Around the corner: guff on honoring the late Ken Morrison’s legacy will be nothing unless the commitments are extended beyond 12 months
It has adapted to the online challenge with ‘Morrisons on Amazon’, which covers 60 towns and cities. As a user, I can attest to the efficiency and quality of the service.
It also has a strong relationship with Deliveroo and is increasing access to supermarkets with McColl’s.
The same store sales fell in the six months to August 1, but in the past two years there was an increase of 8.4 percent. It’s frustrating that the stock market has never properly valued Morrisons’ properties and interest in the “levelling” north. As a result, his fate will be decided by a Takeover Panel auction to be settled between the CD&R consortium headed by Terry Leahy and Fortress’ less attractive bid, backed by the dodgy Softbank.
The roughly £7bn competing bids for Morrisons could put some £20m in Potts’ pocket and enrich advisors, but do very little for anyone else. To achieve the returns private equity investors demand, there will be heavy cost cutting and asset sales after loosely made bid promises expire after 12 months.
It could be good for Morrisons, with £3bn in debt on his balance sheet, to take out more loans now. But what happens when the happy years of free and easy money come to an end? Angry about honoring the legacy of the late Ken Morrison will be nothing unless the commitments are extended beyond 12 months.
As chairman, Andy Higginson could save his reputation and truly secure the future by requiring commitments, such as retaining all owned properties and manufacturing centers, to be legally binding.
This would give the takeover panel the right to sue the buyers if the provisions are violated. That could cause the buyers to withdraw in horror.
But it would benefit UK food security, consumers and the wider public interest.
The intended buyer merger partner for Easyjet will in any case come from the aviation sector. Many of the world’s largest airlines have been built on mergers, although not all of them have been very successful.
Johan Lundgren, who has had to endure the slings and arrows of founder Stelios Haji-Ioannou, is clearly confident that he can see the Hungarian courier Wizz. The London-listed airline, with its network of Eastern European routes, has emerged stronger from Covid than Easyjet.
It has focused on moving passengers from temperate northern regions to the Mediterranean and recovery has been hampered by confusing traffic light systems. Lundgren’s response to a slow return to air is to seek new capital of £1.2bn to ensure it has the financial firepower to come back stronger. Lundgren wants to use the war chest to buy up slots left behind by other carriers in the pandemic. As Covid fades, Easyjet should have the slots, the reputation of better service than most no-frills airlines, and the fleet to bounce back.
The desire for cheap European travel seems unanswered, as Ryanair’s response has shown. BA’s talk of returning to Gatwick with stripped-down service suggests the industry isn’t down and out.
Wizz may be wrapped up, but if Easyjet doesn’t get well soon, it could attract other suitors.
They will still have Stelios to deal with.
The next scientific triumph for the UK down the slipway is Oxford Nanopore with its DNA sequencing technology. It proved its worth during the pandemic when its platform was used around the world to identify Covid variations.
At the latest fundraising, the company was valued at £2.4 million. It plans a ‘golden’ stock that will evaporate after three years as takeover protection. There are no gains yet, but increasing confidence in British life sciences should spark interest.