Activist investors including Elliott Associates, one of the most aggressive US hedge funds, have built a stake in struggling grocer Wm Morrison and are pushing for a radical shake-up of its property portfolio.
The pressure comes at a torrid time for Morrison, which became the standout loser of the Christmas trading period when it reported dismal trading on Thursday.
Dalton Philips, the supermarket's chief executive, is already under scrutiny from shareholders. Earlier this week, several top 10 investors told the FT they have questions about his strategy for Britain's fourth-biggest grocery chain by market share.
Elliott, controlled by US billionaire Paul Singer, is one of the most unpredictable players in America's activist investor industry, and is involved in a protracted fight with the Argentine government over its refusal to accept the country's proposed debt restructuring.
The hedge funds are seeking an overhaul of Morrison's property portfolio, said people familiar with the situation. Elliot holds positions in a number of UK-listed food retailers, the people said.
The value of Morrison's properties - estimated to be worth about £10bn - is almost twice its market capitalisation, which is £5.5bn following a sharp fall in its share price on Thursday. It owns the freehold to about 90 per cent of the property.
When Mr Philips updates investors on a review of the retailer's property portfolio later this year, he is widely expected to announce that Morrison will sell and lease back some of its stores.
This would dismantle a key plank of the tenure of Sir Ken Morrison, who ran the grocer for 50 years. He consistently dismissed such a move and viewed ownership of the stores as "essential" to the company's success.
However, the activist shareholders are pushing for the company to go further than a sale and lease back. One option they believe could create more value is the route taken by Canadian grocer Loblaw, which hived off its property assets last year and sold 20 per cent to investors.
However, Morrison is thought to be very reluctant to go down the route pursued by Loblaw, where Mr Philips was chief operating officer before he took the helm at Morrison in 2010.
Elliott and Morrison declined to comment.
The dire trading at Morrison has prompted some analysts to suggest that the retailer could be the target of a break-up bid.
Mike Dennis, analyst at Cantor Fitzgerald, said Morrison was "vulnerable to a break-up by outside interests" that could see it return to its roots as "a small regional supermarket group".
Elliott has been involved in several high-profile activist battles in recent years including at National Express, the UK transport group, Actelion, the Swiss biotech company and Riverbed, the US-based technology company. Earlier this week it forced McKesson to increase its bid for rival pharmaceuticals group Celesio by €0.50 a share.
Additional reporting by David Oakley and Ed Hammond in New York
© The Financial Times Limited 2014. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation