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M&S shares jump over takeover speculation

by LLB Reporter
22nd Nov 21 10:33 am

Retail giant Marks & Spencer’s shares rose to their highest in two-and-a-half-years following reports that New York-based Apollo Global Management is eyeing a buyout.

The Sunday Times reported that the US private equity giant has been “running the rule” over the high street chain.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, told the Guardian that Apollo is mulling a buyout based on its interest in grocery.

“Apollo has flirted with other acquisitions in the UK grocery sector, losing out in its quest for Asda, and then pulling out after making advances for Morrisons. Given its thwarted attempts so far, there is growing expectation that the group may make an offer for the company, particularly given that food was such a star performer in the last set of results,” Streeter said.

“Apollo will be weighing up the future value of Marks and Spencer’s e-commerce tie-up with Ocado, and speculation that its success so far may lead the retailer to buy out Ocado’s 50% share indicates the weight of expectation about its growth prospects. However, shares have surged more than 27% since those impressive results and if the price continues to climb, there is a chance Apollo may turn into more of a reluctant suitor.

“It does demonstrate how the UK is still near the top of private equity shopping lists, with valuations of UK listed companies dragged down while the economy continues to reverberate with problems caused by the pandemic and Brexit after-effects.’

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