Morrisons Share Price Forecast as a Hostile Takeover Battle Looms

Summary:

In this article, we explain what to expect for Morrison share price as a hostile takeover battle looms by the US CDR private equity firm

The Morrisons share price will be in the spotlight today after the company rejected a takeover offer recently. The stock ended last week at 178p, which was 2.45% below the highest level on Thursday.

What happened: Wm Morrisons is the fourth-biggest supermarket chain in the UK after Tesco, Asda, and Sainsbury’s. The company has more than 490 stores in the UK and generates billions in revenue every year. As a result, the company benefited substantially during the pandemic as people stockpiled. Its revenue rose modestly to 17.5 billion pounds in 2020.

The Morrison stock price will be in the spotlight a week after the company’s shareholders rejected the enumeration report. The biggest mover will be the confirmation that the company rejected a takeover bid by Clayton, Dubilier & Rice (CDR). The US private equity firm offered 8.7 billion pounds for the company. The management and the board decided to reject the offer saying that it undervalued the company.

The announcement came a week after UK regulators agreed to a takeover of Asda by TDR Capital and Issa brothers. The deal was valued at more than 6.8 billion pounds.

As such, the Morrison share price will be active as investors position for action from the private equity firm. According to the FT, CDR has committed to continue its pursuit of the company. This could include increasing its offer or talking directly to shareholders. CDR seems to be attracted by the company’s business structure. Unlike the other big 4, Morrisons owns 85% of its stores and has a large food manufacturing business.

Morrison share price forecast

The four-hour chart shows that the MRW share price has not done well recently. It has even underperformed the FTSE 100 index. The shares are at the same level as the 25-day and 15-day moving average (MA). It also ended the week between the support and resistance levels at 170p and 185p. Therefore, the shares will likely rise this week as investors price in the firm’s hostile takeover. The key point to watch will be 230p, which was the offer price by CDW and is about 32% above the current level.