Comment: Going local helps Morrisons and high street
FIRST we were being swamped with out-of-town retail sheds, now the supermarkets are busy swallowing up empty shops in the high street.
Morrisons, which has been slow to move into the convenience store sector, has bought 49 vacant outlets from the collapsed video chain Blockbuster to add to the seven it acquired from camera chain Jessops.
It was already committed to boosting its network of “corner shops” from 12 to 70 this year and these purchases will allow it to speed up the process, although it is some way behind Tesco Express with more than 1,200 and Sainsbury’s Local which has about 400.
But Morrisons’ move is good news for shop workers and for the ailing high street in which one in ten shops is lying empty. It will create jobs at its rebranded Morrisons M Local stores and the move could be well-timed as more people shop locally.
However, it will take more than a few more grocery stores to reverse the decline of town centres. The Scottish Government is introducing measures to bring empty properties back into use but it is also cutting empty property rates relief. Other proposals, such as Edinburgh Council’s daft plan to introduce Sunday parking charges, need to be reviewed.
ITV in view as merger mania takes hold
Mega-deal fever has broken out in the US and there appears to be a pick-up in activity over here.
Investcorp’s £145 million swoop on Scottish oil company Hydrasun is just the latest and ITV was also in the frame yesterday as investors pushed the stock to the top of the FTSE 100 leader board on bid speculation.
ITV may be a minnow compared with American Airlines, Dell or Heinz, who have all been involved in big deals recently, but it is one of Britain’s biggest 100 companies.
We have been here before, of course, and there is a whiff of me-too buying in the shares following Liberty Global’s recent acquisition of Virgin Media. That’s not to rule out a potential buyer lurking in the wings, but the rise in the shares yesterday appeared to pre-empt interest in a media sector that some say is ripe for consolidation. Citigroup and Nomura issued positive notes on ITV as they believe its prospects look better than for some time.
The conditions for more corporate activity are falling into place. Downturn or not, companies have deleveraged their balance sheets, rebalanced their portfolios, cut costs and built up cash reserves.
Together with the availability of cheap finance, at least for bigger firms, optimism over the eurozone and the US, and a feeling that valuations have bottomed out, firms are now more confident about making acquisitions.
In a corporate finance market starved of big deals, they cannot come soon enough.
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Weather for Edinburgh
Wednesday 19 June 2013
Temperature: 9 C to 18 C
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Wind direction: West
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