UK supermarkets add collective £8bn to values as takeover boom continues

Industry

The UK’s largest supermarkets have seen their collective share prices jump by more than £8 billion following Morrisons’ bidding war.

Speculation surrounding further private equity buyouts in the UK’s booming grocery sector have sent the share prices of Tesco, Sainsbury’s, Marks & Spencer and Ocado skyrocketing since June.

According to The Mail, the UK’s listed supermarkets have now added a collective £8.2 billion to their market value since Morrisons first revealed that Clayton Dubilier & Rice tabled a takeover bid on June 19.

Morrisons alone has seen its shares jump by 62 per cent, raising its market capitalisation by £2.7 billion and putting the grocer in line to return to the FTSE100 during the index reshuffle later this week.

READ MORE: Sainsbury’s shares hit 7-year high as analysts say buyout hinges on Morrisons bidding war

Sainsbury’s, which has been at the forefront of growing takeover speculations, saw shares skyrocket nearly 13 per cent since reports emerged over last weekend that Apollo Global Management was considering a takeover bid.

Since June Sainsbury’s market capitalisation has now jumped £1.2 billion, though this was still behind its larger rival Tesco’s gains of £2.6 billion after its share prices jumped 14 per cent.

Marks & Spencer also saw its share increase 20 per cent adding £584 million in value while Ocado, which now runs its retail operation in partnership with M&S, enjoyed gains of 8.3 per cent equating to around £1.2 billion.

It comes amid a breakneck year for UK business buyouts, with around $45 billion being spent on acquiring British companies in the first half of 2021 alone, 85 per cent of which were made by private equity firms.

According to portfolio manager Tom O’Hara: “UK for sale is very much an ongoing theme and it will remain so until the market becomes a lot better valued.

“If the market refuses to value a company appropriately, private equity will come and take it off your hands on the cheap,” he added.

The surge in British buyouts has been driven by discounted British stock prices largely thanks to Brexit, seeing the UK’s FTSE 100 suffer compared to its European and US counterparts.

Since August 2018 the FTSE 100 is down eight per cent, while the US and European stock indexes are up 65 and 25 per cent respectively.

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