Apollo says it is evaluating a possible bid to takeover Morrisons

Apollo Global Management expressed plans of hopping onto the battle for WM Morrisons Supermarket plc (LON: MRW) on Friday after it failed to acquire peer Asda last year. Morrisons shares opened about 12% up on Monday and remained almost flat throughout the day.

Morrisons currently stands at the fourth spot in the list of the UK’s largest supermarket groups. According to Apollo, it is gauging a possible offer for Morrisons before it is presented to the board of directors.

Morrisons’ board recommended Fortress bid on Saturday

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The news comes only days after Morrisons’ board recommended a £6.3 billion takeover led by Japan’s SoftBank-backed Fortress Investment Group. Nothing, however, is finalised until shareholders accept or reject a proposal. So Apollo can still grab stakeholders’ attention with a sweetened proposal.

Refinitiv’s data shows Silchester, Blackrock, and Columbia has a 15.2%, 9.6%, and 9.4% stake, respectively, in Morrisons, making them the three largest shareholders of the supermarket chain. Neither of the three has so far commented on the proposals.  

Morrisons rejected CD&R’s offer in June

Last month, Britain’s fourth-largest grocery chain had rejected Clayton, Dubilier & Rice proposal that valued it at £5.52 billion. In line with the United Kingdom’s regulations, CD&R can return with a better offer until 17^th July.

The takeover panel, however, has not disclosed a deadline for Apollo so far, until when it has to move on or withdraw from its plans related to Morrisons. The supermarket giant currently has a network of 500 stores in the UK and employs roughly 118,000 people in total.

In May, Morrisons said its sales jumped 5.3% in the first quarter as the Coronavirus continued to fuel eCommerce. Digital sales in Q1 were up more than 100% on an annualised basis. The Bradford-based company forecasts £435 million of adjusted pre-tax profit this year. At the time of writing, the £6.45 billion company has a price to earnings ratio of 67.52.