Sainsbury’s share price climbed this week as news came to light of an abandoned bid by a consortium involving the supermarket’s biggest shareholder, the majority owner of Formula 1 and a property group that counts Center Parcs and Canary Wharf as assets.
The stock ended up 1.8% at 290p on Monday - after Sky News broke the story on Sunday - as the City took to the idea the retailer’s shares may have been undervalued.
However, big jumps in share price this year - up 26% in the past three months - likely put the consortium of the Qatar Investment Authority, CVC Capital Partners and Brookfield off the bid.
The hike came as the unwitting management team of Coupe, Rogers and Tyler threw their efforts behind their ambitious Argos takeover.
“The idea of an audacious consortium bid underscores the equity market’s capability at times to undervalue companies, as evidenced by Sainsbury’s bid for long-languishing Home Retail and the interest of McCormick in Premier Foods,” said Clive Black of Shore Capital.
Premier Foods has seen another 7% drop in share price to 39p after Credit Suisse called on it to prove the “bold rejection” of McCormick’s offer was the right decision. The investment firm trimmed its target price from 70p to 50p, a 23% discount to the 65p offer. It added company growth targets of 2%-4% looked “ambitious”.
A Credit Suisse note was also the main driver in a more than 27% jump in Poundland shares to 176p, clawing back some of the heavy losses so far this year as investors reacted to poor trading and difficulties with the 99p Stores deal.
“We now expect Poundland to see a gradual recovery in its operating metrics over the next few quarters and, while recovery is delayed, we think valuation looks compelling as the shares seem to be discounting no recovery in margins,” analysts at the bank said. “A decision on the Spanish trial, a gradual shift to more multi-price, self-help, and new management are all catalysts that could help the investment case from here.”
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