Morrisons Share Price Forecast as a Hostile Takeover Battle Looms

    Morrisons Share Price Forecast as a Hostile Takeover Battle Looms
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    Morrisons’ share price will be in focus today after the company recently rejected a takeover offer. The stock closed last week at 178p, which is 2.45% below its peak on Thursday.

    What happened: Wm Morrisons is the fourth-largest supermarket chain in the UK, following Tesco, Asda, and Sainsbury’s. With over 490 stores across the country, the company generates billions in annual revenue. Morrisons benefited significantly during the pandemic as people stockpiled essentials, leading to a modest increase in revenue to £17.5 billion in 2020.

    The spotlight on Morrisons’ stock comes after the company’s shareholders rejected a remuneration report last week. However, the biggest news is that the company rejected a takeover bid from the US private equity firm Clayton, Dubilier & Rice (CDR). CDR had offered £8.7 billion for the company, but Morrisons’ management and board decided to reject the bid, stating that it undervalued the company.

    This announcement follows the UK regulators’ approval of Asda’s takeover by TDR Capital and the Issa brothers, a deal valued at more than £6.8 billion.

    Morrisons’ share price will likely be active as investors anticipate further moves from the private equity firm. According to the Financial Times, CDR is committed to pursuing the acquisition, which could involve increasing its offer or negotiating directly with shareholders. CDR is reportedly attracted to Morrisons’ business model, which includes ownership of 85% of its stores and a significant food manufacturing operation.

    The four-hour chart shows that Morrisons’ share price has struggled recently, underperforming the FTSE 100 index. The shares are currently at the same level as the 25-day and 15-day moving averages. The stock ended the week trading between support at 170p and resistance at 185p. Given the potential for a hostile takeover, the shares are likely to rise this week as investors adjust their positions. The key level to watch will be 230p, which was the offer price from CDR and represents a 32% premium over the current share price.