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Morrisons soars | Capita disposal | FTSE 100 above 7,000

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4.30pm: Morrisons lifts market

Morrisons

Equities were lifted by bid interest in Morrisons which soared 61.55p (34.49%) to 239.9p, just above the price proposed by Clayton Dubilier & Rice on Friday.

Others in the sector rose sharply. Sainsbury’s was up 10.60p (4.08%) and Ocado was 79.50p (4.23%) higher.

AJ Bell investment director Russ Mould. said: “Strategically Morrisons has cemented an important relationship as a key supplier and partner to Amazon, and to McColls convenience stores. It has also established a successful online delivery service. 

“Morrisons’ balance sheet has plenty of asset backing and the valuation was relatively depressed before news of private equity interest.

“The business had done a lot of hard work and put itself in a stronger position to continue fighting competitive threats, but the market hadn’t recognised this shift and the shares had languished due to concerns about the difficult environment in which Morrisons operates.

“The market value of the business had weakened so much that it clearly triggered some alerts in the private equity space to say the value on offer was looking much more attractive.

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“The shares traded at 235p early on Monday which is higher than that 230p proposal from CD&R. The market therefore seems confident that the suitor will have to raise its offer price or someone else might step into the game and we’ll see a bidding war.

“Amazon has long been touted as a potential buyer for Morrisons to help give it a much stronger foothold in the UK grocery markets so that’s an obvious name to watch.”

The FTSE 100 recovered from an early dip to close at 7,062.29, up 44.82 (0.64%).

Morrisons bid interest here


10.30am: Euro2020 blow

Scotland’s preparations for tomorrow’s make-or-break Euro 2020 clash with Croatia have been thrown into turmoil after Billy Gilmour tested positive for coronavirus.

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9.30am: Distillery site chosen

Wolfcraig has chosen a site for its new £15m distillery.

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8.30am: London falls

As forecast the FTSE 100 dipped below the 7,000-mark, trading at 6,993.26, down 24.21 (0.35%), as investors fretted over tightening monetary policy.


7am: Capita sells Axelos

Outsourcing group Capita has announced the sale of its 51% stake in Axelos, a joint venture with the UK government, for an enterprise value of £380m which will generate total cash proceeds of £184m and net proceeds of £172.5m.

Established in 2013, Axelos is jointly owned by the Cabinet Office and promotes best practice in IT project management.

The company said it remains on track to deliver revenue growth in 2021 for the first time in six years, in particular in its specialist services division.

It has won a number of significant contracts this year, including the Royal Navy Training contract and an extension for Tesco Mobile.

In August the company will move to the new structure of two core divisions, Capita Public Service and Capita Experience, and the third division holding non-core assets, Capita Portfolio.

It remains on track to deliver £50m of annualised cost savings from 2022 onwards, as announced in March and currently expects half year adjusted revenue to be flat on prior year adjusted revenue.

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Jon Lewis, chief executive, said: “I’m pleased with the progress that we have made so far this year.

“We remain on track to meet our priorities for 2021: to deliver revenue growth for the first time in six years, improve operating cash flow, strengthen the balance sheet, and implement our new organisational structure.

“We are confident of delivering positive sustainable free cash flow in 2022”.


7am: Morrisons confirms proposal rejection

Supermarket chain Morrisons said it had rejected an unsolicited £5.5bn proposal over the weekend from the US private equity firm Clayton, Dubilier & Rice, which had offered to pay 230p a share in cash.

Morrisons’ share price closed at 178.45p on Friday, valuing the company at £4.3bn.


Global markets

The FTSE 100 is expected to open the new week below the 7,000-mark after indications in the US of a tightening of monetary policy.

Traders are now anticipating rises in interest rates starting late next year, earlier than forecast, while there is a likely to be a tapering of support that has underpinned the rise in worldwide stock markets.

Japan’s Nikkei 225 took a big hit in early trade, dropping 3.6%. Hong Kong’s Hang Seng was off 1.5%, while the Shanghai Composite was barely changed.



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