RE: Good Morning all24 Aug 2021 11:30
Text Content No.1
So much for the usual slow trickle of hard news during the ‘silly season’ of summer. Fresh off the heels of a £7bn Sir Terry Leahy-backed offer from CD&R for Morrisons on Friday, speculation is now swirling around the future of Sainsbury’s.
A story in The Sunday Times hinting that buyout giant Apollo Global Management is lining up a bid for Sainsbury’s sent investors into a buying frenzy today. Shares soared 15.3% higher to 339.8p – approaching highs not seen since February 2014.
But while the market has certainly reacted wildly, there seems to be little in the way of substance to the report just yet.
Despite an eye-catching headline and intro that claimed “private equity giants are circling Sainsbury’s with a view to possibly launching bids of more than £7bn”, there aren’t any hard facts to cling onto in the body of the story. It turns out any interest from Apollo in Sainsbury’s is “understood to be exploratory”.
Even The ST’s sister paper, The Times, appeared to pour cold water on the news today, reporting sources insist Apollo is not looking at Sainsbury’s, hasn’t appointed advisors and has not held talks with the supermarket. On top of that, Apollo’s possible involvement with the Fortress consortium’s attempt to beat CD&R to the Morrisons prize would also rule it out of a tilt at Sainsbury’s.
And the fact Sainsbury’s hasn’t even bothered to release a comment to the London Stock Exchange tells its own story.
Shore Capital analyst Clive Black was withering in his assessment of the speculation in a note to the broker’s client this morning. He called the story “sensationalist” and “shallow” while also pointing out the paper effectively rehashed what has been a widely rumoured since Apollo lost out to TDR and the Issa brothers in the race for Asda last year.
Read more:
Sainsbury’s shares rocket on takeover speculation
Ex-Tesco CEO Terry Leahy outlines CD&R’s case for buying £7bn Morrisons
Why private equity wants to take UK food and drink assets off the shelf
Morrisons faces break-up risk in private equity takeover, analysts warn
However, there is no smoke without fire, and it’s not to say The Sunday Times is wrong.
Even if Apollo doesn’t end up tabling a bid for Sainsbury’s, there is a long line of other potential suitors – from Lone Star, CVC Partners, Blackstone and KKR to Fortress and other consortia of investors – with mountains of dry powder and supermarket assets on the shopping list.
Today’s share price rise at Sainsbury’s highlights the market is now alive to the fact that even the very biggest businesses are in play – including Tesco, with its market cap scraping against the £20bn mark. Indeed, Tesco was carried higher today as well, with shares up by more than 2% to 252.3p.
Shore Cap’s Black doubled down on his prediction there will be no listed UK supermarkets in due course.
So what’s behind this sudden influx of interest in a sector much underappreciated by both the stock
Sign In
Follow the stocks
