Grocery Guru Episode #33: The Bid For Morrison's Supermarket

Join Andrew Grant and Darren A. Smith in the thirty-third episode of the Grocery Guru. They discuss the bid from United States private equity firm Clayton, Dubilier & Rice, of which Terry Leahy is a Board Member, to buy Morrison's Supermarkets. But will Amazon now make a bid too? So here's today topic, Bid for Morrison's Supermarket.

You Can View the Full Bid For Morrison's Supermarket Transcript Below:

Darren A. Smith:

Welcome to episode 33 of the Grocery Guru. And we are here today with that guru, Andrew Grant. How are you?

Andrew Grant:

Yeah, morning Darren. Yes, very good. Thank you very much.

Darren A. Smith:

Now, we've both had the lurgy, but that's not why we're on video, to tell everyone we've had the lurgy.

Andrew Grant:

No, I think you're right. As I think you put it, we've done so little social interaction in the last 15 months. At the minute, you actually come near anybody else, you catch something.

Darren A. Smith:

Does seem that way, does seem that way. But more interestingly, for our viewers out there, what's in our postbox, mail bag, on your lips, on your mind today?

The Bid for Morrison's Supermarket

 

Andrew Grant:

Well, there's only one big news in the world of grocery today, I'm sure nobody's missed it. But it's the possible bid for Morrisons. Interestingly, we're doing this a couple of days late. It's Monday morning. The news broke Friday, that... What are they called? Clayton Dubilier & Rice? American venture capital group. Best known for floating B&M, Home Bargains.

Darren A. Smith:

Oh! I didn't know that. Okay.

Andrew Grant:

And have got ex Tesco CEO Terry Leahy on their board. So, they've got a bit of knowledge and a bit of experience. But yeah, that news broke Friday evening. And this morning, Morrisons' shares have gone up over 30%.

Darren A. Smith:

So, the news is that this venture capitalist, what do they want to do? I know you know this.

Andrew Grant:

Well, interestingly the supermarkets are incredibly good value. We've talked so many times in these sessions of how well we did over the pandemic, et cetera. But that hasn't been reflected in their share prices.

Darren A. Smith:

No.

Andrew Grant:

And there was an article I read yesterday, to say that Morrisons' share price prior to today, was the same as it was 20 years ago.

Darren A. Smith:

Wow! Okay.

Andrew Grant:

So, all that effort, hard work by 115,000 people who work for Morrisons has added effectively no value in 20 years.

Darren A. Smith:

And just remind anyone who hasn't seen the previous episodes, we've talked about the pandemic, that supermarket sales have gone up roughly 10%. So they've done very well, if one believes. But as an example, it's cost Sainsbury's 468 million in COVID costs, which means their profits went down by about 40%. So, they seemingly have done well, but they haven't. Sorry, back to you.

Andrew Grant:

Yeah. And obviously that's what shareholders are most interested in, are they making profits? And yeah, Tesco had its Q1 results out on Friday. Sales flat, if not slightly declining. Because as we've talked about, they're now like for like with the massive boom last year, and everybody's going out to restaurants and pubs again.

Darren A. Smith:

Yes, yes.

Andrew Grant:

So yeah, the share prices of all the quoted retailers are really struggling. And they're saying that this might create a feeding frenzy, even Tesco is not too big to be taken over.

Darren A. Smith:

Well, that's very true. So this venture capitalist comes in, so what are we thinking? They might buy Morrisons? Morrisons are currently number four, their market share's about 11%. Have I got that right?

Andrew Grant:

Yep.

Darren A. Smith:

But we've also got in the wings here, Mr. Bezos and Amazon. What's your take on that?

Andrew Grant:

Yeah, your mind is thinking the same way as me, yeah. Morrisons have a pretty huge distribution agreement with Ama...