Why Silchester’s real beef with Morrisons deal boils down to price

The 15 per cent shareholder, the grocer's largest, is "Not inclined" to support the 252p-a-share bid from a Fortress-led consortium, given there was "Little" in the offer that Morrisons couldn't manage on its own. The implication from Silchester is that a scheme is used when a buyer doesn't think it can win the support of large, long-term shareholders. Hedge funds hold only about 5 per cent, according to M&A Monitor's Rule 8.3 Tracker, tiny for a deal of this type. Even if Morrisons manages a 78 per cent turnout, the same as at its contentious annual general meeting, Silchester isn't far from having a blocking stake - which makes its "Not inclined" comment feel pretty limp. As a result, Morrisons' shares continued to trade head and shoulders above the offer price on Wednesday at 266p. Silchester's real beef seems to be timing, given that the market thinks there are other bids to come.

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