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(Alliance News) - Apollo Global Management said Monday it is considering making a takeover offer for Wm Morrison Supermarkets after the grocer at the weekend agreed to a GBP6.3 billion buyout by a group including Softbank.
Apollo Global Management confirmed it is in the preliminary stages of considering a takeover offer for the FTSE 250 supermarket chain.
"No approach has been made to the board of Morrisons. There can be no certainty that any offer will be made, nor as to the terms on which any such offer might be made," the private equity firm said.
This comes after Morrisons on Saturday accepted a takeover offer from a consortium of investment groups following its rejection of a private equity bid last month.
Under the GBP6.3 billion deal, the group of investors comprising Softbank Group Corp-owned Fortress, Canada Pension Plan Investment Board and Koch Real Estate Investments will pay 252 pence per share plus a 2p special dividend. The stock closed at 239.80p on Friday in London.
According to the announcement, the deal also includes GBP3.2 billion in debt, which makes the total operation worth GBP9.5 billion with debt recovery.
The takeover of the supermarket based in Bradford, West Yorkshire follows the rejection of a GBP5.5 billion offer in June from Clayton Dubilier & Rice that sent the chain's share price soaring – but which Morrisons ultimately said was too low.
"As an investment destination, the UK is attracting increased interest from overseas and the latest twist in the Morrisons bidding war has upped the ante," commented Richard Hunter, head of Markets at interactive investor.
He added: "It is perfectly feasible, however, that this is not yet the end game. UK supermarkets in general are cash generating engines, whose share price gains have been capped by the costs of the pandemic, despite increased sales, making them more attractive on valuation metrics. In addition, Morrisons largely owns its freehold estate, adding another sweetener to any potential purchase."
Morrisons shares were up 12% early Monday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: marginally higher, up 0.70 point at 7,123.97
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Hang Seng: down 0.7% at 28,116.26
Nikkei 225: closed down 0.6% at 28,598.19
DJIA: closed up 152.82 points, 0.4%, at 34,786.35
S&P 500: closed up 0.8% at 4,352.34
Nasdaq Composite: closed up 0.8% at 14,639.33
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EUR: up at USD1.1865 (USD1.1845)
GBP: up at USD1.3845 (USD1.3791)
USD: down at JPY110.99 (JPY111.31)
GOLD: up at USD1,789.90 per ounce (USD1,783.83)
OIL (Brent): up at USD76.31 a barrel (USD75.97)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
US Independence Day holiday observed. Financial markets closed.
0955 CEST Germany services purchasing managers' index
1000 CEST EU eurozone services PMI
1100 CEST EU quarterly balance of payments
0900 BST UK SMMT registration figures
0930 BST UK services PMI
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After failing last week, the 23 members of the OPEC+ group of oil producers will try again Monday to reach agreement on how much crude to put on the market. Since May, the group has raised oil output little by little, after slashing it more than a year ago when the coronavirus pandemic crushed demand. The current proposal is to increase output each month from August to December by 400,000 barrels per day, providing oil markets with an additional two million bpd by the end of the year. But it is the suggestion of extending the agreement on incremental increases until the end of 2022 that has caused a hitch. The hold-out is the United Arab Emirates, which on Sunday criticised that extension as unjust. A video conference between OPEC members and their 10 allies has been scheduled for 1300 GMT to try to resolve the impasse. In April 2020, as the coronavirus pandemic took hold, OPEC+ decided to withdraw 9.7 million bpd from the market and to gradually re-introduce it by the end of April 2022.
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Ireland's private sector expanded at a near record pace in June, with the services sector enjoying its best month of growth in roughly five-and-a-half years, IHS Markit said. As the private sector forged ahead with its bounceback from virus curbs, accelerating inflation became a recurring theme too. Price inflation reached a near 13-year high. The AIB services business activity index surged to 63.1 points in June, from May's tally of 62.1. The June figure indicated the fastest service sector growth since January 2016. A figure above 50.0 points shows the sector is expanding. The composite output index - a wider reading of the whole private sector using both the services and manufacturing PMIs - inched down to 63.4 points in June, from May's record of 63.5.
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Tropical storm Elsa battered Jamaica and Cuba with winds and rain Sunday after claiming at least three lives while cutting a path of destruction through the Caribbean, authorities said. Flooding, mudslides and damaging gusts were expected as the storm – downgraded from hurricane status but still powerful – crept north toward the US. As of 8 pm Sunday local time, Elsa was packing maximum sustained winds of 60 miles per hour, the US National Hurricane Center said. By Sunday evening, the NHC had reported that tropical storm warnings had been cancelled in Jamaica and in parts of Cuba. But a warning remained in effect for other areas in Cuba and the Florida Keys, with Elsa forecast to hit the western part of the state as early as Tuesday.
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BROKER RATING CHANGES
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GOLDMAN SACHS CUTS IMI PLC TO 'NEUTRAL' ('BUY') - TARGET 1700 PENCE
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BARCLAYS CUTS HOCHSCHILD MINING TARGET TO 185 (250) PENCE - 'EQUAL WEIGHT'
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PEEL HUNT RAISES HARBOUR ENERGY TO 'ADD' ('HOLD') - TARGET 472 (420) PENCE
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COMPANIES - FTSE 100
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Glencore said Kalidas Madhavpeddi will take over as chair on July 30. He will succeed Tony Hayward, who was appointed to the board at the time of the miner's IPO in 2011 and was chosen as chair in 2013. "Following consultation with the company's largest institutional shareholders it was agreed that he would retire as chairman within the year after our last AGM, following a second extension of his tenure beyond 9 years on the board," Glencore said. Madhavpeddi has been on the Glencore board since February 2020 and has over 40 years of experience in the international mining industry. He is currently a non-executive director of Novagold Resources, Trilogy Metals and Dundee Precious Metals, which are listed on the Toronto Stock Exchange. "As the world transitions to cleaner forms of energy and mobility, our portfolio of commodities will allow Glencore to play a key role in helping us achieve the goals of Paris and play a key role in the ongoing energy and mobility transition," said Madhavpeddi.
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COMPANIES - FTSE 250
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Ultra Electronics said it is reviewing its full-year guidance following strong recent trading. Since updating on its first quarter performance, the firm - which serves the defence, security, critical detection & control markets - said underlying trading in the first half has been strong and ahead of internal expectations. The order book continues to grow and is significant ahead of last year, and orders for the full year are expected to be "well ahead" of 2020. "Group revenue growth in H1 2021 has been robust despite the previously announced mainly Covid-19 driven operational inefficiencies experienced in the Maritime SBU in Q1 2021 which are now broadly resolved," the firm said. It added it is confident the One Ultra strategy will deliver "improved and sustainable" long-term value. As a result of the strong first half trading, the firm is reviewing its guidance. It expects to provide, as part of the publication of its interim results, an update on outlook for the full year. Late last month, Ultra Electronics said it had terminated talks regarding a possible combination with Cobham. Former FTSE 250 constituent Cobham, which now is controlled by Advent International, earlier had said it was mulling a potential takeover offer for Ultra, with a view to create a "global defence electronics champion".
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Hipgnosis Songs Fund said operative net asset value per share was USD1.6829 at the end of March, up 11% from USD1.5114 a year ago. The like-for-like valuation uplift across the portfolio was 10% during the year. The musical intellectual property rights investor acquired 84 catalogues in the year for USD1.09 billion, taking the total portfolio to USD2 billion, invested across 138 catalogues. "Having delivered another strong, and index beating, set of results, having advocated for songwriters at the highest level including the DCMS hearings taking place in UK Parliament and having increased our synch income through Song Management, as a percentage of total revenue, I'm delighted to say our ambitions are turning into reality," said founder Merck Mercuriadis.
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COMPANIES - MAIN MARKET AND AIM
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Clean energy fund HydrogenOne Capital said it expects to raise GBP250 million in an initial public offering on the London Main Market. HydrogenOne said it has the backing of INEOS, which has committed a minimum of GBP25 million. The float is planned for the end of July.
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Meanwhile, several companies announced plans for IPOs on AIM in London. Bradda Head, which is exploring for lithium in the US states of Nevada and Arizona, hopes to raise GBP6.2 million later this month. Further along is electric motor developer Saietta Group, which expects to start trading on AIM on Wednesday with a GBP102.1 million market capitalisation, having raised GBP37.5 million in its IPO. Tech-focused investor Forward Partners said it plan to list on AIM in mid-July, raising GBP25 million.
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COMPANIES - OTHER
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John Lewis Partnership has announced plans to build 10,000 rental homes in the UK over the next few years to help address the national housing crisis, PA reports. Around 7,000 of the homes would be built on sites in John Lewis's existing portfolio, while the remainder will be on new sites. The high street stalwart has said it wants to have a strong social purpose in the future, and wants to play its part in addressing the national housing crisis. Its first properties will range from studio flats to houses, it said. PA understands no existing stores will be demolished to make space for the new venture.
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Monday's Shareholder Meetings
none scheduled
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By Tom Waite; thomaslwaite@alliancenews.com
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