NEWS that Morrisons has recommended a takeover bid from a US investment firm took many by surprise last week.
The Bradford-based chain, the most traditional of our ‘big four’ supermarket groups, chose the unusual time of Saturday morning to announce that it was recommending a 254p-a-share offer worth £6.3bn from a consortium led by Fortress, a US investment firm owned by Japan’s Softbank.
Also part of the consortium are Koch Real Estate and Canada’s Pension Plan Investment Board.
The news was greeted by plenty of people suggesting that the late Sir Ken Morrison – who built the business from a stall on Bradford market selling eggs and butter and run by his parents, William and Hilda Morrison, into Britain’s fourth largest grocer – would be spinning in his grave.
The plain-speaking Yorkshireman, who favoured short-sleeved shirts and checking the bins at the back of his shops to make sure staff weren’t chucking too much stuff away, would not have liked the idea of his pride and joy falling into the hands of Yank financiers.
I’m not so sure.
You see the one thing he really didn’t like was the City.
He didn’t enjoy having to go flat cap in hand to the City of London to answer to brokers and analysts.
He was not alone.
The common theme I have learned from many entrepreneurs and executives who have floated their companies on the London Stock Exchange is that they resent having to justify how they run their businesses to City analysts who can wipe millions, if not billions of pounds off the value of companies simply with the flourish of their pens.
One critic once described this rarefied group as “teenage scribblers” and I can see why.
I worked covering City stories in London for a couple of years and the analysts always struck me as having more arrogance than their talent could ever justify.
When Morrisons announced its surprise £3bn takeover bid for Safeway back in 2004 it received an inordinate – and totally unjustified – amount of criticism from the City.
London-centric financiers and the press arrogantly assumed that this Bradford-based chain of shops which were mainly in the North and Midlands of England was out of its depth.
It had to organise junkets to take journalists and analysts out of London to one of its few stores in the South.
When they arrived at the superstore in Essex they wandered the aisles, probably a little shocked that the floors weren’t covered in sawdust and there wasn’t a bloke in a white coat milking a cow in the dairy aisle.
They were shocked when they discovered that Morrisons actually sold smoked salmon.
Sir Ken came up against plenty of ignorance and arrogance in the City and so it wasn’t hard to understand why he didn’t enjoy his trips down there.
He was a traditional grocer who relied on gut instinct and knowing his customers – not spreadsheets and focus groups.
When you consider that the City has never really liked or valued Morrisons then it is a bit easier to understand why it thinks it might be in better hands owned by a consortium of North American investors.
Its share price has languished for years so why wouldn’t it be better off with owners who do value it?
Of course there are concerns about the potential buyers’ long-term intentions.
Unlike its rivals, Morrisons still owns the freehold of many of its shops and so there is a fear, particularly with real estate player Koch involved, that the Fortress group plan to leverage this property to bolster their bid.
And would a new owner really value Morrisons’ unique model in which it directly owns and runs its meat processing operations as well as its own farms and fishing fleets?
You’d have expected the Morrisons board to have done its due diligence and it seems the potential new owner has committed to not selling off stores, retaining existing management and keeping the ownership of its own supply chain.
Two other US private equity houses are said to be mulling counter bids for the supermarket so this story has some way to run.
If Morrisons were happy on the stock market and with its current valuation then it wouldn’t have recommended the offer from Fortress.
The much-missed Sir Ken liked to portray himself as a simple Yorkshire shopkeeper – think Arkwright from Open All Hours – but he was so much more than that.
Bear in mind he got the idea to expand the business from market stalls to supermarkets when he saw how ‘grocery marts’ worked in the United States and bought a small chain of redundant local cinemas.
Behind the warm smile and gravelly voice was a shrewd and very pragmatic entrepreneur who knew his business inside out.
He’d have known where it would be better off.
And years of experience told him that that certainly wasn’t on the stock market.
:::
IT’S coming home.
I’m already sick of that line and we are still two days away from the European Championship final.
I’ll leave the jingoistic claptrap to others.
Robbie Savage’s repetitive cliched bilge aside, I’ve enjoyed this tournament.
I don’t know whether it is better than any previous ones.
All I know is that it is nice to watch football with crowds again.
The booing of oppositions national anthems aside, having fans back in stadiums is a wonderful thing.
I haven’t been to a live football match for 18 months.
How will I feel when I do?
Will I celebrate success on the pitch such as a great pass or a goal being scored the way I used to?
I almost forgot, that shouldn’t be a problem.
I’m a Derby County fan.
:::
HAVING moved house a few times in recent years, when I volunteered to help my Mum move recently, I knew what to expect.
Estate agents that do very little but charge a lot. Tick.
Conveyancing lawyers that do very little, very slowly but charge a lot. Tick.
Removal firms that are so busy you have to plan your move around their schedule. Tick.
It is all so predictable and never changes.
No wonder they say moving house is one of the most stressful experiences you can go through.
However I was able to make a positive difference on one of the elements above.
My Mum had got a quote from a local removals firm for her move to a new home two miles down the road in Derbyshire.
It seemed a bit steep to me, particularly when they told her they couldn’t do her chosen day.
So I phoned a removals firm I have used several times over the last few years.
Despite Move-It Removals being based in Bradford, they quoted me a price that was a third of what the local removal firm wanted to charge.
Like every other job Move-It have done for me, they were on time, friendly, positive and really helpful.
It really does restore your faith that there are companies that just want to do a good job and charge a fair price.
I highly recommend them.
https://www.
:::
A NOTE arrived following last week’s blog.
Solicitor Brian Addlestone, of Leeds law firm Addlestone Keane, said: “Enjoyed the oenophile reference David – basically a drunk.”
Yes, Brian, you are right.
But I’m a sophisticated drunk.
Cheers.
:::
I’M having a few days away so the blog is taking a break next week.
I hope to return to you in a fortnight as a tanned, bulging Adonis.
And if that doesn’t tell you I need a break, nothing will.
Have a great weekend.