Morrisons and Asda deals fuel £17 billion M&A boom

The value of retail merger and acquisitions (M&A) has skyrocketed thanks to the takeovers of Asda and Morrisons.

Analysis by law firm RPC showed deals were worth £17 billion in the last 12 months, up from £416 million.

This was “largely due” to the buyouts of the Big 4 grocers for a combined £13.9 billion, it said.

However, the number of M&A deals also soared to 37, up 28 per cent.

READ MORE: Issa brothers load Asda with £500m debt after petrol U-turn

One recent acquisition was Pernod Ricard’s buyout of online spirits seller The Whisky Exchange.

RPC head of corporate Karen Hendy noted that retailers had drawn interest “from several fronts”, including “established high-street giants, newer online retailers and private equity funds”.

Buyers believed the “increased personal savings made during lockdown will flow into the retail sector”, she continued.

The £7.1 billion takeover of Morrisons by private equity firm Clayton, Dubilier & Rice (CD&R) was cleared this month by shareholders, following a four-month bidding war.

Analysts put this down to the large proportion of freeholds owned by the supermarket, which could be used to extract value via sale-and-leaseback deals.

Asda was bought by the billionaire Issa brothers and buyout firm TDR Capital last year.

It has apparently struggled to find a chief executive following the early departure of boss Roger Burnley in August.

Some believe that grocery high-fliers had avoided Asda’s top job over fears about the Issas’ management style.

“It’s a great opportunity but you’ve got to accept that you won’t be calling the shots, they want to run it in the way they want,” one source told The Times.

“That’s where the danger is.”

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