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Peel Hunt believe the move marks a "highly significant and highly positive development", noting that while the McColl’s fascia is popular and evolving, the switch to the Morrisons Daily fascia could "really help densities".

"This could just be the fillip McColl's shares need after a quarter or two in the doldrums: we are confident the trial will work and that the fascia will be rolled out to more stores," its analysts said.

Peel Hunt stated the rebrand might also gave McColl's a "real chance" to see its like-for-like revenues make progress again.

Although Peel Hunt noted results of the trials wouldn't be known for a while, the broker still felt the potential of the Morrisons Daily fascia could be significant and was capable of really moving the dial over the medium-term.

"This is a good opportunity to get behind the shares again, and one that we hadn’t seen emerging in the short term," concluded analysts Jonathan Pritchard and John Stevenson.

The potential significance of McColl's Morrisons Daily rebrand is huge:

The potential significance is huge. Could McColl’s convert all 1,600 stores to the Morrisons fascia? Probably not any time soon, but as it’s learned with its acquisition of Co-op stores, the McColl’s brand isn’t strong.

Equally significant is that McColl’s will be selling Morrisons’ own brand in the trial stores rather than the Safeway range Morrisons developed for its wholesale customers, which is in the majority of McColl’s stores.

Opinion: McColl’s turnaround can finally begin.

If this proves more of a hit than Safeway, it should look to roll it out across the estate. The Morrisons name has greater resonance with shoppers than Safeway and we seem to be getting used to retailers selling their own label in other stores.

The Co-op hasn’t developed a different sub-brand for Nisa and Costcutter, it’s seeing the value of scaling up the Co-op brand. Even M&S is now considering selling Ocado products in its stores. So surely selling Morrisons own brand in 1,600 McColl’s stores could do both the power of good.

Cutthroat competition and Brexit risks are likely to deter most buyout firms from pursuing Asda unless they can get it for an attractive price, according to advisers who have pitched the deal.

While buyout firms sit on about $1.2 trillion of undeployed capital and are keen to do deals, financiers have been concerned about providing loans to U.K. businesses and it has become more difficult to get sterling-denominated debt to finance acquisitions of British assets, people familiar with the matter said last month.

Buyout firms have previously run the ruler over U.K. supermarket chains. In 2007, Sainsbury fended off approaches led by CVC Capital Partners and the Qatar Investment Authority. Sky News reported that they teamed up on another proposal in 2016 that was abandoned after the grocer moved to buy Home Retail Group Plc.

CVC is not currently looking at the grocer as a potential takeover target, people familiar with the firm’s thinking said. A representative for CVC declined to comment.

Asda would be an affordable to a private equity firm, if large, bite for a financial sponsor. In the absence of another bidder, the valuation might fall to, say, 6 billion pounds. Then assume that half the deal could be funded in debt. If Walmart kept a minority stake, the equity the buyout firm would need to put up could be as little as 1.5 billion pounds.

This could prove tempting – if a buyout firm could satisfy itself that getting out of the investment would be as easy as getting in. With antitrust regulators likely to block a sale to another grocer, the exit would have to be through an initial public offering.

To generate an internal rate of return of roughly 15 percent over five years would require the buyout firm to grow the equity value to 6 billion pounds. Assume debt stayed steady as spare cash was reinvested in the business (it needs it). Asda would then have to attain an enterprise value of 9 billion pounds to deliver the desired gains.

Asda's margins are already wide. So the strategy would have to focus on getting sales up. CEO Roger Burnley has delivered the beginnings of a turnaround, growing sales by 2.6 percent in 2017. That would need to be sustained over the lifetime of the investment. The company would need to poach customers from big grocers Sainsbury and Tesco Plc, most likely by undercutting them on price, and from discounters Aldi and Lidl by convincing them to pay a little more for the convenience of a full range.

Sure, it would still be tough to get an Asda deal past any private equity firm’s investment committee. But a buyout wouldn’t be Walmart’s only option. It could combine Asda with another retailer, such as B&M European Value Retail SA – both serve the same price-conscious shoppers.

So at least Walmart has options. That isn’t the case with Sainsbury. CEO Mike Coupe could try to strike a deal with Wm Morrison Supermarkets Plc instead of Asda – but that could face similar regulatory constraints. Or he could stick with a standalone strategy. But that won't generate anything like the value promised by the Asda tie-up. What’s more, the company’s performance has recently deteriorated. A private equity bid for the supermarket might be possible, but it would be less than straightforward.

With the Asda deal falling apart at the checkout, Sainsbury will be left with the advice of one of its own marketing slogans: love your left overs.

Personal note - If Sainsburys tried to join with Morrison I do not think they would have the same difficulty as with the Asda deal as any tie up with Morrison would give the combined group around 1.5% less market share then Tesco currently have.

So far Coupe has had more failures than successes as he failed with setting up Netto and failed again when trying to take over Nisa which went to the Coop.

I understand there is a very high probability that the dividend will be cut to between 7.2p and 8p which will put McColl's on a yield of around 12%.

Sainsbury’s (SBRY) is challenging the Competition and Markets Authority (CMA) probe into its merger with Asda, showing just how tricky this mega deal will be, says AJ Bell.

‘Investors may begin to question Sainsbury’s management more strongly on the merits of pressing ahead with the tie-up, given the demands it places on their time and resources.’

'Sainsbury’s may be better off staying smaller but getting smarter in the way it responds to the needs of shoppers’.

Interesting to see what the analysts are forecasting for McColl's dividend going forward.

For the FY18 declining from 10.3p to 7.2p, a decline of around 30% and putting McColl's on a current yield of 11%.

For the FY19 a dividend of 7.5p.

I understand this drop in the share price today is due to Sainsbury's will lose the goodwill of the CMA by going for a judicial review to get an extra 11 days to put their case forward, even though Sainsbury's and Asda have already had 6 month to get their case ready.

Sainsbury's/Asda asked for phase 1 to be waved through and if they had not done so would have given them the time they're now asking for.

I totally disagree with Looks. Debs are a wash with debt, Flybe are loss making with both companies being very poorly managed. The analysts say that McColl's is well managed.

McColl's has been steadily closing poorly performing and lose making stores which is idfficult for Debs to do as they have far far fewer and massive stores on long leases.

McColl's have struggled this year due to two reasons outside of their control and are temporary.

It seems all the supermarket shares are falling, just due to sentiment McColl's are falling twice as much.

Because the free cash tap is being turned off, any company with any negative news is being hit really hard, unlike a couple of years ago when negative news would be just shrugged off due to all the cash sloshing around.

Flybe already feeds Virgin Atlantic flights at Gatwick, Heathrow and Manchester, and delivers passengers to Air France-KLM on a range of routes to Paris and Amsterdam.

Immediate synergies with Virgin Atlantic are limited. Flybe operates small Bombardier and Embraer aircraft, while Virgin has only wide-bodied Airbus and Boeing jets.

But the Flybe network could be tuned to provide maximum connectivity with Virgin services, particularly at Manchester – which, unlike Heathrow and Gatwick, has plenty of scope for expansion.

The market capitalisation of Flybe has dropped to around £20m, and any bid is unlikely to be significantly higher as the buyer will also need to inject tens of millions of pounds to provide liquidity.

Never thought about Virgin and of course they will be allowed to keep Flybe's LHR slots where as BA would have had to give then up for free.

Virgin Atlantic, which is partly owned by Sir Richard, would be interested in the smaller carrier for two main reasons:

On top of providing a wider passenger traffic into Virgin Atlantic's long-haul network, a takeover of Flybe would allow Virgin Atlantic to gain access to the take-off and landing slots at London Heathrow Airport reserved to domestic flight.

I see Aberforth still selling, now down to just 2.35%.

If Flybe is taken over I do not see a bidding war. What I see it that there will be an agreed offer, agreed by the Flybe management, major share holders and the offeree.

Meanwhile, Flybe’s domestic capacity in the UK is scheduled to drop by 5.3 percent this year to 8.9 million seats, giving a market share of 30.2 percent.

UK Domestic Capicity:

Easyjet - 32.62%
Flybe - 30.16%
BA - 24.22%
Ryanair - 04.13%
Loganair - 03.93%
Others - 04.94%

UK Domestic Frequency:

Flybe - 39.81%
Easyjet - 19.02%
BA - 16.76%
Loganair - 12.71%
Ryanair - 02.21%
Others - 09.58%

Flybe has operated from 33 airports in the UK during 2018, with Manchester, Birmingham and Southampton its top three by number of flight departures.

However, in terms of frequency share, the airline accounts for more than half the number of flights at ten of the 33 airports. At four of those - Anglesey, Southampton, Exeter and Belfast George Best City - it accounts for more than 80 percent of all departures.

Looking at capacity share, Flybe operates more than 90 percent of departure seats at two UK airports - Anglesey and Southampton. At its home base of Exeter, the carrier accounts for almost four-fifths of the total capacity on offer this year.

UK-based regional airline Flybe this month put itself up for sale as it battles “softening” growth in the European short-haul market and continued headwinds from higher fuel and currency costs.

Although the carrier made a profit of £7.4m in the six months to 30 September 2018, the figure was 54 percent lower than during the same period 12 months ago. In October 2018, the airline warned investors that full-year losses would be £22m.

With talks currently taking place with “a number of strategic operators” about a potential sale, Routesonline looks at Flybe’s network and its place in the market.
Capacity cuts

Flybe’s total capacity is set to drop by 4.9 percent to 14.1 million available seats in 2018, compared with 14.8 million a year ago. Capacity across its summer schedule this year was down by 6 percent, while capacity across its winter 2018/19 schedule is forecast to be 0.6 percent lower year-on-year. The total number of available seats on offer in November 2018 is the lowest since 2014.

The capacity cuts come as the airline continues its fleet reduction programme and ends non-profitable routes. Flybe is cutting its fleet size to an “optimum level” of 70 aircraft by early 2020, including five ATR aircraft fulfilling a SAS white label contract.

At 30 September 2018, the fleet size totalled 78 aircraft, compared to 80 six months earlier, following the return of one Bombardier Q400 turboprop and one Embraer E195. A further two end-of-lease Embraer E195 aircraft are due to be handed back over the next six months.

In May, Flybe concluded that the Bombardier Q400 is the “best core aircraft” for its current and future needs. However, it still has a heritage order for four Embraer E175s due in 2019. The carrier currently operates a fleet of 76 aircraft - 54 Bombardier Q400, six Embraer E195, 11 E175 and five ATR 72s.

Of its top ten routes by capacity in 2018, Flybe looks set to cut the total number of available seats on five of them, OAG Schedules Analyser flight schedules show, but combined capacity across the ten will rise by 2.2 percent due to the BHD - LCY rising by 45.1%. Its number one route by capacity, Belfast City - Manchester, will reduce by about 2.2 percent. The largest capacity drop in the top ten is on the Aberdeen - Manchester sector.

Flybe top 10 routes in order:

1. BHD-MAN
2. BHD-BHX
3. BHX - EDI
4. GCI - JER
5. AMS - BHX
6. BHX - GLA
7. MAN - SOU
8. ABZ - MAN
9. JER - SOU
10. BHD -LCY

Flybe's place in the market:

Flybe is set to retain its position as the largest provider of domestic services in the UK during 2018. According to OAG Schedules Analyser data, it will operate 121,361 domestic flights this year, which is more than easyJet and British Airways combined.

However, easyJet will overtake Flybe when it comes to domestic capacity. In 2018, easyJet is set to offer almost 9.7 million available departure seats, a rise of 4.8 percent on last year, to give it a market share of 32.6 percent

I understand 35 of Flybe's Q400s are sub-leased through Rebulic Airlines of the US with an average lease length of around just 8 months as the average lease length as at March 2015 was 4.6 years. At least 13 Q400s are owned out right by Flybe. I'm not sure weather their other 6 Q400s are leased or owned.

I agree about BA often being more expensive on code shares. To Spain I always book through the Iberia site with an Iberia flight number even if on a BA aircraft is cheaper, same when flying to Helsinki on Ba, I book on the Finnair site with a Finnair flight number.

Deutsche Bank was telling clients: "Medium-term, we continue to believe that easyJet will be one of the main beneficiaries of the consolidation process in Europe as weaker players exit the market, something which already appears to be accelerating again, in direct correlation with the higher oil price."

If easyjet take over Flybe I can see them replacing the Q400s with A319s and the routes that are unable to take A319s the Q400s replaced by franchised partner Stobart ATRs or Loganair SAAB2000s.

I see many on this tread are talking about a bidding war with a minimum take over price of 35p which I think is completely rediculous. If this was to be the case why have several instiutions vastly reduced their holdings in Flybe?