WM Morrison looks to freeze out its rivals

WM Morrison has had a relatively quiet few years on the acquisition trail since its $7.6bn acquisition of Safeway back in March 2004. Given all the well documented issues that deal bought to WM Morrison for a number of years afterwards it’s really no surprise.

There were a couple of relatively small acquisitions this year including kiddicare.com, an online baby products business, and a 10% stake in Fresh Direct, a US-based online grocery retailer. However, if we are to believe yesterday’s papers these two purchases were merely warm-up exercises for the potential Big One.

WM Morrison is apparently preparing a bid for Iceland, the frozen food retailer, which has had a fairly chequered past in terms of ownership and has been put up for sale by the officials winding up Landsbanki, the Icelandic bank that failed after taking control of the retailer in 2008.

If WM Morrison learns from the mistakes it made when acquiring Safeway then this potential acquisition could quickly catapult Morrisons significantly closer in terms of market share to Asda and Sainsbury’s, the UK’s third and second place retailers, respectively.

Iceland currently has 750 stores, compared with Morrisons’ 442 stores and is much more geographically widespread than Morrisons in terms of a south of England presence.

But I am sure there will be a number of other hurdles to overcome including possible regulatory scrutiny and potential counter bids by other parties before this one gets all packed away and delivered.
 

Filed under: M&A, Ocado, retail, supermarket, takeover, UK, food