One of the most exciting bidding battles in recent British financial history is slowly heading towards a conclusion. It’s been a thrilling (and highly profitable) year for shareholders in Wm Morrison Supermarkets (LSE: MRW). The Morrisons share price has been catapulted higher by round after round of takeover bids. But this action didn’t start until late June, since when the returns from MRW stock have been outstanding. But, with one final round of bidding to come, will the shares top £3 next month?
The Morrisons share price slumps
From August 2018 until October 2020, the Morrisons share price was in steady decline. On 22 August 2018, MRW closed at 266.8p, but slipped to end 2018 at 213.25p. The next year proved little better for the stock, which declined again to end 2019 at 199.8p. Then came 2020 and the Covid-19 global pandemic. This shunted Morrisons shares southwards even further, hitting an intra-day low of 157.55p on 17 March last year. The shares then staged a comeback, before falling back during the UK winter lockdown. On locked-down Bonfire Night (5 November 2020), they closed at a mere 161.75p.
MRW goes BOOM
After a boost following ‘Vaccine Monday’ (9 November 2020), the Morrisons share price ended 2020 at 177.35p. It then trundled along, closing at 178.45p on Friday, 18 June, before news emerged that weekend of the first in a flurry of takeover offers for the UK’s fourth-largest supermarket. On the following Monday, 21 June, the stock closed at 240.2p, up more than a third (34.6%) in a single day. The first bid, for 230p a share in cash, was quickly superseded by more bids.
On 3 July came a bid for 254p, from a trio led by SoftBank-owned Fortress and including Canadian pension fund CPPIB and a division of US giant Koch Industries. The Fortress trio then came back with an improved offer of 272p a share. However, this was trumped by original bidder Clayton, Dubilier & Rice (CD&R) offering 285p a share. That’s another 55p a share on top of CD&R’s original (rejected) bid of 230p.
I think this share will go over £3
As I write, the Morrisons share price stands at 292.4p, just 2.5p short of its intra-day high of 294.9p on 3 September. On 11 May, I wrote, “I would buy at the current Morrisons share price” [of 183.95p]. Since then, the stock has soared by almost 109p. That’s a whopping return of almost three-fifths (58.9%) in four months. Not bad for what I saw as a classic value stock at the time.
However, this corporate game of ‘supermarket sweep’ is not quite over yet. Morrisons has agreed with the UK Takeover Panel that final bids for the Bradford-based business will be decided at an auction to take place in October. I expect the Morrisons share price to finally exceed £3 when this tug of war is over. After all, neither deep-pocketed American bidder is likely to give up at the final hurdle. But I don’t own MRW shares at present and I wouldn’t buy at today’s price. That’s because I see marginal share-price upside from here, perhaps only a few more percent. Also, the unlikely, but utterly terrifying, outcome of a failed auction and a share-price collapse might keep me awake at night!