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Rumours have begun to swirl around Marks & Spencer, with speculation emerging over a potential offer from a US private equity firm, the departure of CEO Steve Rowe and the long-term future of the joint venture with Ocado.
Apollo Global Management reportedly thinks the retailer’s shares make the company cheap to buy and also that the market undervalued its online delivery service with Ocado, which M&S invested £750m in back in 2019 for a 50:50 stake.
However, The Sunday Times added it was unclear whether the recent resurgence in the share price as M&S issued two profit upgrades in short succession has dampened the interest of Apollo, which has also been linked to a potential bid for Sainsbury’s after missing out on buying Asda.
Shares in M&S jumped 3.1% higher to 248.3p as markets opened this morning.
The M&S stock is up 35% in the past month alone and 83% in 2021 so far to take the business back to touching distance of re-entering the FTSE 100.
Shares also surged at Ocado on Friday to finish the week 6.7% higher at 1,914.1p on speculation that M&S is weighing up buying out the other 50% of its online joint venture.
It followed a suggestion from an analyst at Deutshe Bank that there was room for M&S to aquire the whole of Ocado Retail.
“Cashflow is no longer being squandered on an unsustainable dividend but saved to recover the investment grade credit rating that may be required to buy out Ocado,” he speculated.
“In our view M&S needs to build firepower to enable it to make an offer for the remainder of the Ocado joint venture as we head towards 2025.”
And this morning, The Times reports that M&S CEO Steve Rowe is gearing up to step down within the next 18 months.
Although, the paper says there have been no formal conversations with the M&S board.
Rowe has been chief executive since 2016 and his turnaround efforts have begun to bear fruit in the past few months.
Morning update
It’s a very quiet morning, with no news or updates from the grocery, fmcg or retail sectors.
The FTSE 100 got off to a positive start to open 0.4% higher at 7,254.96pts.
Alongside M&S, Ocado also continued its positive momentum this morning, capitalising on Friday’s gains to rise 0.3% to 1,902.5p.
Elsewhere, AG Barr, SSP Group and McBride were among the early risers, up 2.1% to 489p, 1.9% to 258.7p and 1.5% to 67p respectively.
Early fallers include Cranswick, down 1.6% to 3,602p, THG, down 1.1% to 191.6p, Hotel Chocolat Group, down 1% to 501p, and Just Eat Takeaway, down 0.9% to 5,317p.
This week in the City
A busy morning tomorrow kicks off with half-year results from Cranswick and Pets At Home and full-year results from catering giant Compass. Over in the US, Campbell Soup updates with its latest quarterly numbers.
Britvic reports its full-year results on Wednesday, with expectations of a further recovery with the out-of-home market reopening.
On Thursday, Remy Cointreau reveals quarterly results and hospitality firm Mitchells & Butlers release preliminaries
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