Jul 14, 2021

How a private equity buyer could make the most of Morrisons

The board's decision to recommend a £9.3bn offer from a consortium led by Fortress Capital was partly driven by the private equity group's pledge to honour the legacy of Ken Morrison. Simon Laffin, who was finance and property director at Safeway before its acquisition by Morrisons and later advised on a private equity bid for Sainsbury's, said outright sales of stores were not straightforward. A principal at Atrato Group, said financial buyers would pay high prices for freehold sites with Morrisons as a tenant on a 20-year lease. Although Morrisons is regarded as a well-run operation, there may still be opportunities to cut costs, by reducing ranges in the stores as Asda is doing, or by rethinking the "Market Street" format of separate counters for meat, fish and chilled produce. One former executive at Morrisons warned that the supply chain and counters were both key to the operating model.

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