Sainsbury’s shares reach seven-year high

Sainsbury's half-year profits have slumped again

US buyout firm Apollo is understood to be taking an “exploratory” look at the supermarket chain



24 August 2021

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Following reports that Sainsbury’s could be the latest UK retailer to receive a buyout bid from a private equity firm, the supermarket’s value increased by around £1bn yesterday.

The Guardian reports Sainsbury’s shares leaped up by more than 15% to 340p – levels not seen since February 2014.

The grocer is believed to be the next potential target for foreign private equity cash, after a bidding war for Morrisons drew investors’ eyes firmly towards the larger UK supermarket brands.

Last week, an improved £7bn offer for Morrisons from US private equity firm Clayton, Dubilier & Rice was recommended by the supermarket’s board, after it bettered the £6.7bn offered by rival suitor Fortress.

Following the race for Morrisons, Sainsbury’s is viewed by analysts as the most obvious target for a buyer.

The US buyout firm Apollo is said to be taking an “exploratory” look at company, the Sunday Times states. The newspaper reported that Apollo has been scouting for targets within the sector after missing out last year in the race for Asda, previously owned by the US retail giant Walmart.

Sainsbury’s is “undeniably a good target for private equity with a considerable store estate, with the company having more than £10bn in property assets,” said Neil Wilson, chief market analyst at the financial trading platform

“The Argos tie-up is another long-term growth lever and provides further scale, while profits are on the up again in the wake of the pandemic, and net debt has come down. It’s hard to beat those reliable cashflows,” Wilson added.

Sainsbury’s and Apollo did not comment.



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