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Morrison’s share price remains range-bound as the anticipated buyout of the company moves closer to a potential auction-style conclusion. The takeover battle for Morrison’s supermarket chain has significantly boosted its share price, with two American companies competing fiercely to secure the deal.
Initially, Softbank-owned Fortress Investment Group appeared to be the leading contender to acquire Morrison’s. However, a rival consortium stepped in with a higher bid, positioning itself as the new frontrunner in the buyout race.
On Tuesday, Clayton Dubilier & Rice (CD&R) announced it had reached an agreement with the company’s pension trustees to provide additional support for the pension schemes ahead of the shareholder vote to approve the preferred bid. CD&R has offered a higher bid than Fortress Investment Group in what has become a highly competitive bidding war. Shareholders are set to vote on the preferred bidder in October.
Morrison’s share price has been trading within a narrow range following a series of “gap-and-go” moves that lifted it from the June 24 low of 231.3 to the current level of 291.2. The lower boundary of this range is at 287.6 (the high from October 28, 2013), while the upper boundary is at 297.2 (the highs from September 17, 2012, and May 7, 2013). Breaking above 297.2 could propel Morrison’s share price to new nine-year highs at 307.7.
However, there is also the possibility of a corrective decline, given the steep upward movement in the price. In such a scenario, Morrison’s share price could initially test the 270.2 support level (the “head” from August 28, 2018), with further potential support at the 257.3 (left shoulder) and 249.9 price levels for the bears.