© Reuters. FILE PHOTO: Flags flying outside a Morrison supermarket in New Brighton, Britain, July 5, 2021. REUTERS / Phil Noble
By James Davey
LONDON (Reuters) – UK supermarket group Morrisons agreed on Thursday to a £ 7bn ($ 9.54bn) takeover offer from US private equity group Clayton, Dubilier & Rice (CD&R), dismissing its recommendation of a lower bid from a Fortress-led consortium. Investment group.
Morrisons said the CD & R offering is worth 285 pence a share, beating an offer of 272 pence a share, worth £ 6.7 billion, from the Fortress-led consortium owned by Softbank.
The CD & R offer, which Morrisons board unanimously intends to recommend, gives the supermarket chain an enterprise value of £ 9.7 billion once its debt is taken into account.
The battle for Britain’s fourth-largest retailer after Tesco (OTC :), Sainsbury’s and Asda, is the highest-profile acquisition looming amid a series of offers and counter-offers, reflecting appetite for private equity. by UK Plc.
The offer agreed by CD & R represents a 60% premium over Morrisons’ share price before the participation in the acquisition emerged in mid-June.
Morrisons shares closed at 279.2 pence on Thursday, indicating investors were expecting a higher offer.
CD&R, which has former Tesco boss Terry Leahy as its lead advisor, had a 230-cent-a-share proposal worth £ 5.52 billion rejected by Morrisons on June 17.
Morrisons subsequently recommended a £ 6.3bn bid from Fortress, which was later increased after major shareholders including Silchester, M&G and Hambro indicated they wanted more.
CD&R said it was committed to supporting Morrisons’ existing leadership team, led by CEO David Potts, and executing its current strategy.
“The Morrisons board believes that the CD&R offering represents good shareholder value while protecting the fundamental character of Morrisons for all shareholders,” said Chairman Andrew Higginson.
CD & R’s UK investment history includes foodservice group Brakes Brothers and discount retailer B&M. Current investments include gas station retailer Motor Fuel Group (MFG) and industry groups Wolseley (LON 🙂 and SIG.
Morrisons shareholders will vote on the offer at meetings scheduled for the week beginning October 4.
Under UK procurement rules, Fortress could still come back with a higher bid.
A Fortress spokesperson did not immediately comment.
Analysts have speculated that US giant Amazon (NASDAQ :), which has a partnership agreement with Morrisons, could still enter the fray, although most believe that if it were interested it would have done so by now.
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