Brokers remain bullish as takeover speculation lifts Sainsbury
Bidding adieu to London listed grocers
J Sainsbury: word of mouth
Will the bid battle for Wm Morrison turn into a private equity supermarket sweep? Investors seem confident. J Sainsbury surged this week to a multiyear high. So did Marks and Spencer, whose 33 per cent surge through August can only be explained partly by improved trading.
“We do not believe it is fanciful to speculate that there will be no listed UK supermarkets in due course,” said analyst Clive Black of Shore Capital, Morrison’s house broker.
Yet Black gave short shrift to a report that Apollo Global has been weighing up an approach to Sainsbury, calling the tale “not only sensationalist but quite shallow”. Sainsbury shares had surged by as much as 15 per cent on Monday, in spite of silence from both parties and a virtue-signalling insider purchase: Adrian Hennah last week bought 15,000 shares at 290p apiece, his first trade since joining Sainsbury’s board as a non-executive director in April.
Other analysts were more circumspect. Sainsbury’s house broker UBS stuck with a “buy” recommendation even after Sainsbury surged well above a 300p price target on the back of Apollo’s purported interest, briefly hitting a high of 340p. A leveraged buyout still makes sense at current levels and the grocer’s biggest shareholders, Qatar Investment Authority and Czech investor Daniel Kretinsky, are financially motivated so might welcome an exit, it said.
Sellside research will only ever give a partial view into the cliquey world of UK food retail. For its Morrison bid approach Clayton, Dubilier & Rice is using PR firm Teneo. The PR spinner’s deal team includes recent recruit Claire Scicluna, daughter of Sainsbury chair Martin Scicluna, and Philip Gawith, who is the market’s first point of contact for longstanding Teneo client Tesco.