Morrisons Shares Surge As Investors Bet On Low U.K. Supermarket Valuations

Morrisons, CD&R. Tesco, Sainsbury's, Asda

Shares in U.K. publicly-listed supermarket chain Morrisons surged by almost a third in morning trading today, after Britain’s fourth biggest grocer rebuffed a $7.6 billion takeover from U.S. private equity giant Clayton, Dubilier & Rice.

The huge spike in its valuation was prompted by emerging news over the weekend that Morrisons had become a takeover target for CD&R, potentially sparking a bidding war for the grocer.

The news prompted shares to rise across the grocery sector, as investors bet that other supermarket groups could become targets for private equity investors or that a bidding battle could erupt, with online giant Amazon AMZN -0.9% – which has an online delivery deal with Morrisons – one possible bidder for its partner.

American private equity firms Lone Star and Apollo Global Management APO +1.9% have also been mentioned as possible suitors for Morrisons, which has been battling with a declining market share, now down at 10%, from 10.6% five years ago. There is a sense that the U.K. supermarket sector could be ripe for more potential takeovers. The share price performance of the entire sector is seen as under-performing compared with U.S. grocers, for example, despite being profitable and achieving typical dividend yields of around 4%.

CD&R has history, having previously made investments in the discount U.K. store chain B&M, from which it made more than $1.4 billion.

Morrisons Rebuffs Bid But More Could Follow

Morrisons first announced on Saturday that it had turned down a preliminary bid by Clayton, Dubilier & Rice, which is believed to have been made on or around 14 June. The Bradford-based company said that its board had “unanimously concluded that the conditional proposal significantly undervalued Morrisons and its future prospects”.

CD&R had offered to pay nearly 320c a share in cash, while Morrisons’ share price closed at 247c on Friday, before its surge today as trading reopened for the first time since the announcement.

The New York-headquartered private equity firm has until 17 July to make a firm offer and to persuade a reluctant Morrisons management team to recommend that shareholders agree to the deal.

Sir Terry Leahy, a former Tesco chief executive, is a senior adviser for CD&R and, like its market-leading rival Tesco, Morrisons’ shares have been trading below their pre-pandemic levels as higher costs due to operating throughout the pandemic have taken their toll despite booming sales at essential stores across the U.K.

Morrisons currently employs 121,000 people and made a pre-pandemic profit of $565.5 million in 2019, which plunged to $278.6 million in 2020. It owns the freehold for 85% of its 497 stores. One-quarter of what it sells comes from its own supply chain of fresh food manufacturers, bakeries and farms.

CD&R has so far declined to comment on whether it will return with a higher bid, but analysts believe its approach is probably just the first salvo.

Previously, former Walmart WMT +0.9%-owned Asda was snapped up by the U.K.’s forecourt billionaire Issa brothers along with private equity firm TDR Capital in a debt-based $9.4 billion buyout. Likewise, CD&R could adopt a similar model and combine Morrisons, which has just a handful of convenience stores after a number of limited trials of smaller store formats, with its Motor Fuel Group of 900 gas stations.

There are also wider political concerns that it could emulate the Issas by saddling Morrisons with debt and selling off its real estate assets and CD&R is understood to be weighing political reaction before determining whether or not to come back with a higher bid.

Supermarket Takeovers More Likely Than Mergers

For tightly-regulated U.K. competition reasons, takeovers or mergers between supermarket groups appear increasingly complex. The competition watchdog blocked a proposed $9.7 billion takeover by Sainsbury’s for rival Asda two years ago, determining that the deal threatened to increase prices and reduce choice and quality.

However, comparatively relaxed rules on private equity bids mean few such restrictions apply to takeovers. Private equity firms have acquired more U.K. firms over the past 18 months than at any time since the financial crisis, according to data from Dealogic, and Czech business mogul Daniel Křetínský has established a 10% stake in Sainsbury’s, the U.K.’s second biggest supermarket chain. Having failed in an attempt to take over Germany’s Metro Group last year, he could yet make an offer for a British grocer.

AJ Bell investment director Russ Mould added in an investor note this morning that Morrisons’ balance sheet looks highly attractive, in particular to a private equity firm looking to sell business assets to release cash.

“Morrisons’ balance sheet has plenty of asset backing and the valuation was relatively depressed before news of private equity interest,” he said. “The market value of the business had weakened so much that it clearly triggered some alerts in the private equity space to say the value on offer was looking much more attractive.”

Follow me on Twitter or LinkedIn. Check out my website.

I am a global retail and real estate expert who looks behind the headlines to figure out what makes consumers tick. I work as editor-in-chief for MAPIC and editor for World Retail Congress, two of the biggest annual international retail business events.  I also organise, speak at, and chair conferences all over the world, with a focus on how people are changing and what that means for the retail, food & beverage, and leisure industries. And it’s complicated! Forget the tired mantra that online killed the store and remember instead that retail has always been dog-eat-dog: star names rise and fall fast, and only retailers that embrace the madness will survive. Don’t think it’s not important, your pension funds own those malls!

Source: Morrisons Shares Surge As Investors Bet On Low U.K. Supermarket Valuations

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Critics:

Wm Morrison Supermarkets plc (Morrisons) (LSEMRW) is the fourth biggest supermarket in the United Kingdom. Its main offices are in Bradford, West Yorkshire, England.The company is usually called Morrisons. In 2008, Sir Ken Morrison left the company. Dalton Philips is the current head. The old CEO was Marc Bolland, who left to become CEO of Marks & Spencer.

As of September 2009, Morrisons has 455 shops in the United Kingdom. On 15 March 2007, Morrisons said that it would stop its old branding and go for a more modern brand image. Their lower price brand, Bettabuy, was also changed to a more modern brand called the Morrisons Value. This brand was then changed again in 2012 as Morrisons started their low price option brand called M Savers.

In 2005 Morrisons bought part of the old Rathbones Bakeries for £15.5 million which make Rathbones and Morrisons bread. In 2011, Morrisons opened a new 767,500 square/foot centre in Bridgwater for a £11 million redevelopment project. This project also made 200 new jobs.

References:

  1. “Morrisons Distribution Centre Preview”. Bridgwater Mercury. Retrieved 6 July 2012. This short article about the United Kingdom can be made longer. You can help Wikipedia by adding to it.

Employees Are More Likely To Pretend They’re Working When Employers Track Their Productivity: Here’s Why

Shocked african business man feel frustrated looking at laptop screen

Big Brother-like attempts by employers to track the productivity of remote workers seems to be backfiring.

A new study released by research firm Gartner shows that employees are nearly two times more likely to pretend to be working when their employers use tracking systems to monitor their output. Gartner surveyed more than 2,400 professionals in January 2021.

“Our role as managers is to create an environment where people can do their best work. It’s really hard to do your best work if you feel like you are not trusted,” says Carol Cochran, vice president of people and culture at remote career site FlexJobs. “If I feel like someone doesn’t trust me enough to feel like I’m doing my work without monitoring through software, how do I trust them back? How do I build that physical safety?”

This past year, there’s been an uptick in reports of companies using monitoring software to keep tabs on their newly remote workforces, turning to technology to track their keystrokes and search histories, as well as tools to take periodic screenshots of their computers.

Reid Blackman, founder and CEO of corporate ethics consulting firm Virtue Consultants, said he’s not surprised employees are falsifying their work. “Obviously people are going to game the system … especially if they think the system is unfair,” he says.

Though he says it’s not unreasonable for managers to have concerns about  their workers’ productivity, he suggests they think critically about why they want to use such software and what they stand to accomplish before deploying any systems. Blackman also recommends discussing the move with employees beforehand so they can ask questions and understand the reasoning behind it.

Alexia Cambon, a research director at Gartner, says employers’ initial instincts to track their employees may have been well-intentioned, especially in the early days of the pandemic, when there was a need to recreate in-office strategies at home. However, many companies did not take human behavior into consideration, she says.

“If you know that, as humans, we will struggle to disconnect from a remote world …. then you really need to create strategies to incentivize people to disconnect and not stay on longer hours,” Cambon says.

Gartner also found that adapting office-centric practices for hybrid work environments, such as creating an abundance of meetings, has led to virtual fatigue. Employees who now spend more time in meetings are 1.24 times more likely to feel emotionally drained from their work, the study found.

Cambon cautions that when employees experience high levels of fatigue, their performance can decrease by up to 33% and feelings of inclusion can decrease by up to 44%. Ultimately, these workers are up to 54% less likely to remain with their employers, she says.

Contrary to prevailing advice, Cochran advises companies to reconsider asking their employees to turn on their cameras for video meetings, as doing so can make them more exhausting. As a compromise, she suggests that everyone turn on their cameras for the first couple of minutes to exchange pleasantries with coworkers, but turn them off when it’s time to work.

“We shouldn’t do things just because it seems right or seems like the best practice,” she says. “We really need to be intentional in how we are managing these workforces, whether they are remote, hybrid or in person.”

I’m the Careers reporter at Forbes. Previously, I covered the world’s richest people as a member of the wealth team. Before joining Forbes, I reported for the Hartford Courant and the New Haven Register, covering breaking and local news. A Connecticut native, I studied journalism at Penn State University. Follow me on Twitter @KristinStoller.

Kristin Stoller

 

By:

 

Source: Employees Are More Likely To Pretend They’re Working When Employers Track Their Productivity: Here’s Why

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► Find us at https://www.bernieportal.com/hr-party… Remote work can be tough on teams. In this episode, Ryan covers the struggles HR professionals face with engagement, the productivity tracking platforms that can solve these issues, and how to communicate updates to your team. BerniePortal: The all-in-one HRIS that makes building a business & managing its people easy. http://bit.ly/2NEQ5Qb
What is an HRIS? https://bit.ly/what-is-an-hris Stay up to date with the latest HR news and benefits administration by subscribing to the BerniePortal Blog https://blog.bernieportal.com/ Related Blog: Five Great Productivity Tools for Remote Workers https://blog.bernieportal.com/five-gr… Related Blog: Tips for Tracking Remote Work Employee Engagement https://blog.bernieportal.com/track-e… One Sheet Guide: Technology for Remote Workers by BerniePortal & BernieU https://cdn2.hubspot.net/hubfs/131307… Related Episode: Overtime Pay: Exempt vs. Non-Exempt https://www.bernieportal.com/hr-party…
Referenced Article: Gallup: Reviewing Remote Work in the U.S. https://news.gallup.com/poll/311375/r… For more check out the HR Party of One Tips for Working Remotely Playlist on YouTube https://www.youtube.com/playlist?list… Hubstaff, the employee tracking software we use. https://hubstaff.com/ BernieU: Your free one-stop-shop for compelling, convenient, and comprehensive HR training and courses that will keep you up-to-date on all things human resources. Approved for SHRM & HRCI recertification credit hours. Enroll today! https://university.bernieportal.com/
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How To Invest $100,000 For $940 Per Month In Passive Income

If you have $100,000 to invest, you can easily use it to unleash a dividend stream that pays you $940 a month. That’s $11,280 a year in dividends—on just $100K!

I know you’re probably thinking this sounds too good to be true (and you should be!), especially when 10-year Treasuries dribble out just 0.7%, and the typical S&P 500 stock isn’t much better, with a 1.7% yield.

You’re not retiring on either one of those meager payouts!

But $100,000 invested in a fund with an 11.3% dividend yield (like the one we’ll dive into below) gives you a good start toward clocking out, and on a modest nest egg, too.

The nice thing about this approach is that you’ll still invest in blue chip companies like Mastercard (MA), Deere & Co (DE) and PepsiCo (PEP). That’s the real magic of this strategy: it lets you take low payers like these (PepsiCo is the highest yielder of this trio, at 2.9%) and “squeeze” them for a far bigger payout. Here’s how it works:

Step 1: Open a Brokerage Account

This isn’t really a step for many people—if you’ve read this far, you probably already have a trading account. No matter what kind of account it is, you’re fine to use it (so long as it lets you trade US stocks, of course): there’s nothing exotic about the funds we’re going to target with this strategy. They trade on the major markets, just like stocks. Recommended For You

If you don’t have $100K in your account already, go ahead and transfer it in.

Step 2: Buy a Closed-End Fund

Next, you’ll need to purchase a closed-end fund (CEF). The name we’re targeting today is the Gabelli Equity Trust (GAB). Let’s get into a little more detail on both CEFs in general and GAB in particular.

First, a CEF is like a mutual fund or an exchange-traded fund (ETF), but with some key differences. Unlike mutual funds, whose values are reconciled and unit prices are set after each trading day, CEFs trade during the exchange’s opening hours, just like an ETF or a regular stock.

And unlike ETFs, a CEF has a fixed amount of shares that are established when the fund holds its IPO. While ETFs can, and do, increase their total number of shares outstanding, CEFs do not, which helps keep them small and more manageable. An ETF like the SPDR S&P 500 ETF (SPY) can balloon to have a whopping $278 billion in it, where the biggest CEF has just $4 billion in assets. GAB is much smaller, with $1.3 billion.

GAB is managed by a group of value investors who focus on high-quality, mostly mid-cap and large-cap stocks. This team is headlined by famed value-investing guru (and Warren Buffett disciple) Mario Gabelli. Mario and his team look for companies with reliable cash flow and rising profits, which is why the fund owns Mastercard and PepsiCo.

Unlike ETFs, which usually pay tiny dividends, GAB (like most CEFs) focuses on maximizing dividends to shareholders; it does this by collecting payouts from the companies it holds and rotating assets and occasionally taking profits, which it then gives to shareholders in the form of dividends. That’s one way the fund can sustain a double-digit dividend.

There’s another part to the fund’s strategy, too: a careful use of leverage—by borrowing to invest, Gabelli and his team can enhance their portfolio’s returns, boosting its profits (and your payouts) further. Leverage, of course, also amplifies losses, a risk Gabelli mitigates by targeting companies trading below their intrinsic value and by keeping his leverage manageable—right now, the team has borrowed against roughly 25% of the portfolio.

Leverage is a particularly smart strategy today, with the cost of borrowing essentially at zero.

Now let’s take an exploded view of our GAB investment, so we can see exactly what we’ve got on the line here, and how much we’re getting back in dividend cash:

Contrarian Outlook
Contrarian Outlook

Step 3: Wait Two Months

After we’ve bought our shares, the last part is the easiest: just wait for the checks to roll in.

GAB pays dividends every three months, with the next payout coming sometime around December 14. That means in about two months, an investor who puts $100K in now will have $2,830.05 in time for Christmas.

If you want to set this up as a recurring income stream, all you have to do is set an automatic-payment-transfer from your brokerage account to your bank account for $943.35 every month, and GAB’s dividends will appear in your account—in cash.

Michael Foster is the Lead Research Analyst for Contrarian Outlook. For more great income ideas, click here for our latest report “Indestructible Income: 5 Bargain Funds with Safe 8.8% Dividends.

Disclosure: noneMichael FosterI have worked as an equity analyst for a decade, focusing on fundamental analysis of businesses and portfolio allocation strategies. My reports are widely read by analysts and portfolio managers at some of the largest hedge funds and investment banks in the world, with trillions of dollars in assets under management. I’ve been traveling the world since 1999 and have no plans to stop. So far, I have lived in NYC, Hong Kong, London, Los Angeles, Seoul, Bangkok, Tokyo, and Kuala Lumpur. I received my Ph.D. in 2008 and continue to offer consulting services to institutional investors and ultra high net worth individuals.

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WealthPress 5.64K subscribers If you like this video don’t forget to give it a thumbs up 👍. Subscribe here for more stock market updates, tips, and news: https://www.youtube.com/c/WealthPress… and don’t forget to ring the bell to get notified. Follow us on our social media channels to watch in-depth interviews with Wealthpress Head Traders to see what other trading opportunities they are paying close attention to. 💻 Website: https://www.wealthpress.com 📷 Instagram: https://www.instagram.com/wealthpress… 🐦 Twitter: https://www.twitter.com/wealthpress 📘 Facebook: https://www.facebook.com/WealthPressF..

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Citi Pledges $1 Billion To Narrow The Racial Wealth Gap, Confront Wealth Inequality

On Wednesday, Citigroup, the nation’s fourth largest bank by asset size, pledged more than $1 billion over the next three years to address the widening racial wealth gap and increase the economic mobility of Black Americans.

“The pandemic is a health crisis with severe economic implications and it’s led to an unveiling of the systemic racism that has existed in this country for far too long,” says Citi’s CFO Mark Mason, who’s part of a small cadre of prominent Black executives on Wall Street.

Citi’s announcement follows that of Bank of America’s in June pledging $1 billion  to advance racial equality and economic opportunity over a four-year span.

The coronavirus pandemic and subsequent demonstrations against the killings of Black people have placed a searing spotlight on existing racial disparities in the U.S., bringing them to the fore of the business world’s conscious.

“It has been a catalyst for many companies to really try and get after this in a substantive way, and for Citi, it’s certainly caused us to take a step back,” Mason says.

“The killings of George Floyd in Minnesota, Ahmaud Arbery in Georgia and Breonna Taylor in Kentucky are reminders of the dangers Black Americans like me face in living our daily lives.” Mark Mason, Citi CFO

In the wake of Floyd’s death in May, Mason penned a candid and poignant letter to the bank’s corporate blog, wherein he detailed Floyd’s last minutes alive and acknowledged that the latest deaths of Black citizens in police custody were “reminders of the dangers Black Americans like me face in living our daily lives.”

The letter was widely circulated among business leaders, including Citi’s outgoing CEO Michael Corbat, who encouraged employees in an internal memo to do their part to create a “truly equal and just society.”

As protesters rallied across the country, reigniting a national conversation about race, Corbat challenged his executive reports to conceive a strategic initiative that would address key factors of economic racial injustice and deliver meaningful impact to the Black community.

Those executives swiftly assembled a team of business leaders throughout the firm to devise what would later form Citi’s $1 billion commitment to help advance racial equity and allay the financial drag Black people experience in the U.S.

The funds will be directed toward expanding access to banking and credit building in communities of color, investing more heavily into Black-owned businesses, promoting the growth of Black home ownership and strengthening Citi’s antiracism policies and practices.

Nearly half of the three-year investment will be meted out to boost homeownership for people of color, which has historically been one of the primary drivers of wealth creation in the U.S., and support affordable and workforce housing projects by minority developers. Just under $400 million will go toward procurement opportunities for Black-owned business suppliers while $50 million will go toward additional impact investing capital for Black entrepreneurs.

Citi is allocating $100 million to support the growth and revenue generation of Minority Depository Institutions, which play a critical role in fostering the economic viability of the communities they serve, by supplying them with $50 million in growth capital. The bank’s philanthropic arm, Citi Foundation, will receive the remaining $100 million to provide economic opportunities for young people in underserved communities.

Citi is also scrutinizing some of its own longstanding policies. The bank says it will develop standards for inclusive software design that eliminate bias, expand Citi’s capital market activities with minority-owned broker dealers and increase the representation of people of color on Citi accounts and within their leadership teams.

Mason says that weeding out a company’s underlying and often deeply rooted biases requires a thorough probe and heavy introspection. “It’s not until you take a hard look at those things—the screening processes that exist, the age-old criteria that’s been designed—and are challenged to see who they’re inadvertently leaving out or boxing out, that you can then change them in a way that helps to eliminate those obstacles.” 

The bank’s financial commitment comes on the heels of a new Citi-sanctioned report that puts a numerical figure behind the economic cost of Black inequality in the U.S. Published on Monday, the analysis found that nearly $5 trillion could be added to U.S. GDP over the next five years if four key racial gaps for Black people—wages, education, housing and investment—were closed today, a .4% annual increase to U.S. GDP growth. Closing those key racial gaps 20 years ago could have yielded a $16 trillion gain to the U.S. economy, according to the report.

“Addressing racism and closing the racial wealth gap is the most critical challenge we face in creating a fair and inclusive society,” Corbat, Citi’s CEO, said in a press release announcing the bank’s pledge. “We are bringing together all the capabilities of our institution…like never before to combat the impact of racism in our economy.”

Citi will establish a council of senior leaders from across the company to assess its performance and hold businesses accountable to the bank’s racial equity commitment. Follow me on Twitter. Send me a secure tip.

Ruth Umoh

 Ruth Umoh

I’m a reporter covering the various aspects of diversity and inclusion in business and society at large. Previously, I was a reporter at CNBC, where I focused on leadership and strategic management. I’ve also dabbled in video journalism, working as a breaking news digital producer for New York Daily News, followed by a yearlong stint as a producer at Rolling Stone. My work has been featured on New York Daily News, Yahoo Finance and Time Out. I’m a proud alumna of Columbia University Graduate School of Journalism, receiving honors for my investigative thesis on the alarming number of physicians dying by suicide. Tweet me @ruthumohnews or send tips to rumoh@forbes.com.

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Bank of America has announced that it is committing $1 billion to fight racial and economic inequality, pointing to recent civil unrest over racism in the country as its impetus for the major move.

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How to Determine Exactly How Much Money You Need to Push Your Business to the Next Level

Too often, entrepreneurs–especially inexperienced ones–take the “luxury” approach to funding, incorporating every bell and whistle into their expansion plan by trying to accomplish all goals at one time. That’s nice, but it’s usually not reality and often forces businesses to be cash strapped because of high debt repayments.

That’s why I suggest entrepreneurs take a three-pronged approach to their expansion planning. This exercise helps businesspeople ruthlessly prioritize their needs and determine what is a must and what is frivolous.

A, then B, then C

Let’s say an entrepreneur believes he or she needs $1 million to make their expansion plans a reality.

Now, write up a plan for that amount. What are you going to do with that million? What are the specific investments you will make? What will your cash flow look like afterward? What does your business, in general, look like?

Now do the same exercise with $500,000. Ask yourself the same questions, as well as anything else that’s pertinent. Can you primarily accomplish the same goals with half the cash?

Finally, do the exercise one more time, this time with a loan of only $250,000. What are the answers to the questions now? Might it be possible to do what you want to do with only a quarter of the original loan?

And the answer is…

No set answer will be correct.

Perhaps your initial inclination that you need $1 million was correct. And there’s a good chance that $250,000 simply won’t get the job done.

But there is a decent probability that the middle option might be feasible, especially if it makes you realize that some of the more frivolous “wish list” things you’d like to do are best set aside for now. Remember, you don’t have to accomplish everything at once, and a scaled-down plan might allow you to better focus on more important things, preventing you from overextending yourself.

Of course, don’t get too stuck on exact numbers. Maybe this exercise will have you realize your plan can go ahead effectively for $790,000. Or $615,000. Or $485,000. Or any other number.

The purpose is to gain some clarity and sharpen your focus–not to mention to allow you to decide what makes you most comfortable and enables you to sleep at night. Don’t underestimate the value of that.

Also, keep in mind the time factor. The larger the loan you seek, the longer it likely will take to receive approval from a lender. The saying “time is money” always rings true, especially in this scenario. You might miss opportunities waiting for lender approval.

Remember, business tends to be more of a marathon than a sprint. You need to pace yourself in all aspects, including financing, to better your odds of finishing the race. Hopefully, this exercise helps you accomplish that.

By Ami KassarCEO, MultiFunding.com @amikassar

 

Source: How to Determine Exactly How Much Money You Need to Push Your Business to the Next Level

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Trust: How do you earn it? Banks use credit scores to determine if you’re trustworthy, but there are about 2.5 billion people around the world who don’t have one to begin with — and who can’t get a loan to start a business, buy a home or otherwise improve their lives. Hear how TED Fellow Shivani Siroya is unlocking untapped purchasing power in the developing world with InVenture, a start-up that uses mobile data to create a financial identity. “With something as simple as a credit score,” says Siroya, “we’re giving people the power to build their own futures.” TEDTalks is a daily video podcast of the best talks and performances from the TED Conference, where the world’s leading thinkers and doers give the talk of their lives in 18 minutes (or less). Look for talks on Technology, Entertainment and Design — plus science, business, global issues, the arts and much more. Find closed captions and translated subtitles in many languages at http://www.ted.com/translate Follow TED news on Twitter: http://www.twitter.com/tednews Like TED on Facebook: https://www.facebook.com/TED Subscribe to our channel: http://www.youtube.com/user/TEDtalksD…
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