Morrisons (MRW)

[monabri]

Comparison of Morrison versus Tesco , total return over the last 5 years

Source
https://www.hl.co.uk/funds/fund-discoun ... ion/charts



ps. City of London IT total return over the last 5 years also shown - I was surprised that it hadn't trounced MRW/TSCO. The only consolation being the CTY dividend pedigree versus TSCO.

[monabri]

This bid doesn't surprise me. I have held MRW for a while now as a classic property backed value share because it has been trading at, or just above, book value for some time. Any dividends received are just the cherry on top. I would be surprised if CD&R are the only PE company who have been poking around and considering a bid - this could get interesting...

All the best, Si

I'm surprised you hold.

(genuine surprise - based on margins at MRW being pretty low).

[simoan]

This bid doesn't surprise me. I have held MRW for a while now as a classic property backed value share because it has been trading at, or just above, book value for some time. Any dividends received are just the cherry on top. I would be surprised if CD&R are the only PE company who have been poking around and considering a bid - this could get interesting...

All the best, Si

I'm surprised you hold.

Why? I'm happy to hold asset backed value shares in a part of my portfolio, particularly if it's also cash generative, and MRW is on a FCF yield of 5-7%. That's pretty respectable in a low interest rate world.

All the best, Si

[simoan]

This bid doesn't surprise me. I have held MRW for a while now as a classic property backed value share because it has been trading at, or just above, book value for some time. Any dividends received are just the cherry on top. I would be surprised if CD&R are the only PE company who have been poking around and considering a bid - this could get interesting...

All the best, Si

I'm surprised you hold.

(genuine surprise - based on margins at MRW being pretty low).

I see you added the bit about margins! They are not the be-all and end-all if there is considerable asset backing - it's a different type of investment thesis. You've obviously missed my input on a thread about Vertu Motors which I also hold. That's worked out very well - bought in at 23p when PTBV was ~0.5 and there was no dividend. Again a solid property backed company with wafer thin margins, now with an expected forward dividend yield of 3.5% and a 5yr average FCF yield (Feb 2016-20) of a smidge under 10%. Still good value IMHO although the discount to tangible book has decreased substantially since I bought.

All the best, Si

[monabri]

This bid doesn't surprise me. I have held MRW for a while now as a classic property backed value share because it has been trading at, or just above, book value for some time. Any dividends received are just the cherry on top. I would be surprised if CD&R are the only PE company who have been poking around and considering a bid - this could get interesting...

All the best, Si

I'm surprised you hold.

Why? I'm happy to hold asset backed value shares in a part of my portfolio, particularly if it's also cash generative, and MRW is on a FCF yield of 5-7%. That's pretty respectable in a low interest rate world.

All the best, Si

I think the total return chart above summarises it for me. Ok, it is backward looking but I don't see it getting any easier for (any) supermarket, not really. It seems to be a cut throat race downwards - just need Aldi/Lidl to start offering home delivery (in a plain coloured van for the middle classes, of course ) The cherry on the cake (48p dividend in the last 5 years) has been paid with a static share price over the last 5 years (189p June 26th 2016) to ~178p at close on Friday. Can the FCF be sustained. The current dividend is significantly less than what is was in 2014,15 and features "specials". I'm guessing that PE are looking to flog off certain of the assets where possible to release cash into the business and to lease back.

https://www.dividenddata.co.uk/dividend ... y?epic=MRW

[simoan]

I think the total return chart above summarises it for me. Ok, it is backward looking but I don't see it getting any easier for (any) supermarket, not really. It seems to be a cut throat race downwards - just need Aldi/Lidl to start offering home delivery (in a plain coloured van for the middle classes, of course ) The cherry on the cake (48p dividend in the last 5 years) has been paid with a static share price over the last 5 years (189p June 26th 2016) to ~178p at close on Friday. Can the FCF be sustained. The current dividend is significantly less than what is was in 2014,15 and features "specials". I'm guessing that PE are looking to flog off certain of the assets where possible to release cash into the business and to lease back.

https://www.dividenddata.co.uk/dividend ... y?epic=MRW

Don't get me wrong, was buying MRW at PTBV ~1 the best decision I ever made, no. Was it the worst ever, no again, not by a long way. I'm a sucker for balance sheets stuffed with freehold property, simple as that. It also has a very rare thing indeed for a UK company, a large pension surplus!! I really don't care about anything else, I never buy anything for the dividend and will keep my thoughts on that approach to myself. I'll leave discussions about supermarket wars to those that are misguided enough to think they can predict the future. They can't.

All the best, Si

[scrumpyjack]

UK supermarkets employ 900,000 people. Quite incredible just for shifting groceries from goods in to the customers basket.

There must be huge scope for automation!

[pje16]

There's a bit more too it than the checkout !
https://www.my5.tv/inside-tesco-britain ... upermarket
A third of those are Tesco bods

[Itsallaguess]

UK supermarkets employ 900,000 people.

I think around half of those were in my bread aisle picking for home-deliveries yesterday morning...

Cheers,

Itsallaguess

[pje16]

were they just loafing around

[scrumpyjack]

were they just loafing around

Costs a lot of dough to employ them!

[pje16]

BOOM

[idpickering]

Statement re Possible Offer

Statement re. rejection of conditional non-binding proposal

The Board of Wm Morrison Supermarkets plc ("Morrisons" or the "Company") notes the recent announcement by Clayton, Dubilier & Rice, LLC as manager of Clayton, Dubilier & Rice Funds XI ("CD&R") and confirms that on 14 June 2021 it received an unsolicited highly conditional non-binding proposal from CD&R in relation to a proposed cash offer of 230 pence per Morrisons share for the entire issued, and to be issued, share capital of the Company to be made by funds managed or advised by CD&R (the "Conditional Proposal").

The Conditional Proposal was subject to the satisfaction or waiver by CD&R of a number of pre-conditions including the completion of detailed due diligence and the arrangement of debt financing. The Conditional Proposal provided that Morrisons shareholders would also still receive the final ordinary dividend of 5.11 pence per Morrisons share announced on 11 March 2021.

The Board of Morrisons evaluated the Conditional Proposal together with its financial adviser, Rothschild & Co, and unanimously concluded that the Conditional Proposal significantly undervalued Morrisons and its future prospects. Accordingly, the Board rejected the Conditional Proposal on 17 June 2021.

The person responsible for arranging the release of this announcement on behalf of Morrisons is Jonathan Burke, Company Secretary.

https://www.investegate.co.uk/morrison- ... 00064624C/

[Itsallaguess]

Statement re Possible Offer.

https://www.investegate.co.uk/morrison- ... 00064624C/

Morrisons up 31.5% in early trade.

Cheers,

Itsallaguess

[pje16]

Tesco up 3.2% as well
good day for the foodies !

[Breelander]

Statement re Possible Offer
https://www.investegate.co.uk/morrison- ... 00064624C/

Those who watch MRW's RNS announcements may also wish to watch out for announcements from Clayton Dub. & Rice, they made the offer....

Statement re Possible Offer

Clayton, Dubilier & Rice, LLC as manager of Clayton, Dubilier & Rice Funds XI ("CD&R") notes the press speculation regarding a potential transaction involving Morrisons and confirms that it is considering a possible cash offer for the issued and to be issued share capital of Morrisons.

https://www.investegate.co.uk/clayton-d ... 00064679C/

[Bouleversee]

Statement re Possible Offer.

https://www.investegate.co.uk/morrison- ... 00064624C/

Morrisons up 31.5% in early trade.

Cheers,

Itsallaguess

That's good, but I'm still down over l4% (and nearly 30% with Tesco).

[Breelander]

That's good, but I'm still down over l4% (and nearly 30% with Tesco).

Would 260p help?

Independent retail analyst Nick Bubb said he believed a deal could be agreed at 250p-260p a share...

https://www.sharecast.com/news/internat ... 01826.html

[Bouleversee]

That's good, but I'm still down over l4% (and nearly 30% with Tesco).

Would 260p help?

Independent retail analyst Nick Bubb said he believed a deal could be agreed at 250p-260p a share...

https://www.sharecast.com/news/internat ... 01826.html

Well, it would help but it wouldn't solve the problem since I appear to have paid 276p. I hope Morrison's will stick to their guns. I hate my holdings being taken over even for fair value. Why is the price so low if others are prepared to pay much more to take them over? Must be due to these wretched shorters and traders. Haven't they got a deal with Amazon which ought to benefit them?

[Gerry557]

I don't see this as good news although the share price will likely be much higher come Monday morning.

Not gonna help me acquire more.

I suppose that'll depend on your investment plans here, and each of us might have different individual ideas on that...

Personally, as an income-investor primarily, then with a forecast yield of just 4.1% currently, a potential mark-up on the current share-price or even a complete take-over at a higher price instead will allow me to consider rotating that single-share capital into a much broader income-related Investment Trust on a similar yield or perhaps even higher, and allow me to continue with my long-term plan of generally exiting 'single-share income-holdings' almost completely.

RSA has gone this year under similar circumstances, and perhaps this is the start of what might ultimately be a satisfactory exit-strategy for MRW too, so it'll be interesting to see what happens on Monday...

Cheers,

Itsallaguess

Well if this goes as others plan, I might be following you. I hate being a forced seller even if I take a profit. Having sold Pnn into cash awaiting the chance to get back in soonish I might be left with too much cash and not enough opportunity.

Maybe ITs will not get taken over and keep the dividends rolling in. Some pay quarterly too. Might have to follow you on that board/thread then.