UK service companies see rising prices, staff shortages and arrears amid recovery – business live | Business
Hello and welcome to our continued coverage of the global economy, financial markets, euro area and business.
Wm Morrison’s future hangs in the balance this morning, as the prospect of a full-scale bidding war for the UK’s fourth-largest supermarket chain erupts.
Global management of Apollo, the American private equity group, confirmed this morning that it was in the early stages of examining an offer, citing the possibility of a three ways battle for Morrisons.
Apollo told the City:
Apollo Global Management, Inc. (along with its subsidiaries, “Apollo”) notes recent media speculation regarding Morrisons and confirms that it is, on behalf of certain investment funds it manages, in the early stages of evaluation of a possible tender for Morrisons.
No representations have been made to the Morrisons board of directors. There can be no certainty that an offer will be made, nor as to the terms on which such an offer could be made.
The Apollo move comes after Morrisons, which operates 500 stores and employs around 118,000 people in the UK, announced on Saturday morning that it had accepted a £ 6.3bn offer from a consortium led by a company of American investment. Fortress.
Fortress, owned by Japanese investment giant SoftBank, has partnered with the Canada Pension Plan Investment Board and US billionaire industrialist family Koch to secure a recommended offer for Morrisons.
The Fortress deal, if done, would be the biggest private equity deal since Boots bought out in 2007 for £ 11bn.
This deal is worth 254p per share (252p in cash and 2p in cash dividend). This is a 4% premium over Morrisons closing price of 243p on Friday, but a 42% premium over its closing price of 178p on June 18 – the last business day before the proposal from CD&R.
The deal beat the US private equity firm’s £ 5.52 billion (or 230 pence per share) proposal Clayton, Dubilier & Rice (CD&R) that Morrisons executives dismissed on June 19, saying it was undervaluing the company.
Some analysts believe Fortress’s offer could be successful because my colleague Miles brignall Explain :
Morrisons is considered attractive because it owns full ownership of around 85% of its properties – including its supermarkets – and for its integrated business approach. It maintains long-term relationships with its farmers and suppliers as well as its own feed manufacturing sites and even its own fishing fleet.
Andrew Gwynn, equity analyst at financial firm Exane, said he believes the Fortress-led bid has a good chance.
“Fortress doesn’t appear to be proposing aggressive change, the focus is simply on empowering the leadership team to achieve their long-term strategy. The agreement is conditional on the approval of 75% of the shareholders. We believe it should be achievable in this price range. The deal is very likely to succeed, ”he said.
But today’s Apollo statement suggests the race may still have a way to go – in a battle that has raised fears Morrisons may fall victim to job losses or asset stripping.
Fortress tried to allay those concerns over the weekend, saying it did not plan to engage in any major Morrisons store leaseback transactions.
Joshua Pack, Managing Partner of Fortress, said:
“We believe in making long-term investments focused on providing strong leadership teams with the flexibility and support to execute their strategy in a sustainable and rewarding manner.
“We fully recognize Morrisons’ rich history and the very important role Morrisons plays for colleagues, customers, Morrisons pension plan members, local communities, supplier partners and farmers.
Also coming today
OPEC + ministers will resume their attempts to strike a deal to increase oil supply from August, after failing to reach a deal last week.
On the table is a plan to gradually increase production over the next few months, but also to extend the current deal to cut production – until the end of next year. The UAE has blocked a plan, according to Reuters, unless the UAE’s production base is raised (allowing it to pump more crude.
If a deal is not made … then current restrictions could remain in place, reducing supply as demand increases.
But it is also possible that the OPEC + unit will collapse, ending the agreement to limit supplies – which would mean increased production and lower prices.
Plus, we find out how service sector companies around the world fared over the past month, with the latest purchasing manager surveys. In addition, UK car registration figures for June are expected.
Wall Street is closed to mark Independence Day, after finishing at another record high Friday night, as European markets prepare to take off smoothly:
And former Bank of England Governor Mark Carney – now UN Special Envoy for Climate Action and Finance and Financial Advisor to UK Prime Minister Johnson for COP26 – testifies before the Treasury Committee on the climate change and finance.
- 9am BST: UK car sales for June
- 9 a.m. BST: Eurozone services PMI for June
- 9:30 am BST: UK services PMI for June
- 2 p.m. BST: Brazilian services PMI for June
- 3.30 p.m. BST: hearing of the Treasury Committee with Mark Carney, financial advisor to the Prime Minister at COP26