Supermarkets are in investors’ sights following the sale of Bradford-based Morrisons

Sainsbury’s finished top of the FTSE 100 index on Monday after a battle to take over rival supermarket Morrisons ended in a sale to a US private equity company.

The buyer Clayton, Dubilier & Rice (CD&R) will likely pay £7 billion for Morrisons, after winning an auction process. Shareholders still get to vote on the deal later this month.

AJ Bell financial analyst Danni Hewson said that the market is now thinking about who might be next in the sights of a large potential bidder.

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“Investors seem to be betting that this latest episode of supermarket sweep hasn’t rolled the end credits quite yet,” she said

The battle to take over ended in a sale to a US private equity company.

“Morrisons might have sailed through the checkout and is now sitting in the bagging area waiting to see if the sale goes through but there are still two tempting morsels left on the shelf.

“Whilst most of the money seems to favour Sainsbury as the most likely target, there is much speculation that those private equity boffins might well be pawing over Tesco’s receipts.”

She added that one potential bidder might be Fortress, which lost the Morrisons auction to CD&R.

“The thing about the UK supermarket is that it is a money-spinner and though competition is back on the menu after the discounters came off the bench that they’d rested on during the Covid crisis, there is a certain certainty about the business model that may inspire a second or even a third glance.”