Morrisons in talks with suitors and regulator to begin takeover auction

Supermarket works on basis that offers from US private equity firms CD&R and Fortress are not final

Morrisons has announced it is in talks with both of its US private equity suitors, as well as the UK’s Takeover Panel, which regulates acquisition activity, to begin an auction procedure to settle who takes control of the country’s fourth largest supermarket chain.

Last month, the board of the grocer recommended that shareholders back an offer by Clayton, Dubilier & Rice (CD&R) that would value the supermarket chain at £7bn (or £9.7bn including debt).

However, it is thought that the rival private equity firm Fortress, owned by the Japanese investment bank SoftBank and which has had its offers of £6.5bn and £6.7bn trumped by CD&R, could still come out with an improved bid.

Morrisons said in a statement that it was working on the basis that neither firm had declared its offer to be final, and “such that either offer may be further increased or otherwise revised, a competitive situation continues to exist”.

It added that it was beginning “discussions around an orderly framework for the resolution of this competitive situation” through an auction, which will take place before 18 October on a date yet to be announced by the Takeover Panel. The supermarket chain will then decide whether to recommend the CD&R or Fortress offer to its shareholders.

Morrisons intends to send a document to shareholders on or around 25 September, containing more information about CD&R’s offer, which values the firm at 285p a share, as well as notice of a meeting to approve the offer. If the board backs an improved Fortress bid instead, it will hold a meeting to improve this offer.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

A shareholder meeting to approve either the CD&R or Fortress offers – depending on which one Morrisons backs – is scheduled for a date in the week beginning 18 October.

The supermarket chain said it would not only consider the financial terms of any offer, adding: “The Morrisons board continues to place very significant emphasis on the wider responsibilities of ownership of Morrisons”, which include “recognition of the importance to the Morrisons business of all stakeholders, including colleagues, customers, pension trustees and suppliers as well as the distinct heritage and history of Morrisons and the legacy of Sir Ken Morrison”.

Trustees of its pension schemes have previously warned that CD&R’s £7bn takeover of the chain threatens to “materially weaken” their financial position, leading them to demand additional security over some of the supermarket’s assets.


Joanna Partridge

The GuardianTramp

Related Content

Article image
Apollo in talks to join Fortress-led £6.3bn takeover of Morrisons
US private equity firm’s move cuts chance of takeover battle for UK supermarket group

Julia Kollewe

20, Jul, 2021 @8:05 AM

Article image
Morrisons pension trustees raise concerns over £7bn takeover plan
Trustees say more protection should be put in place before shareholders vote on private equity deal

Zoe Wood

24, Aug, 2021 @6:36 PM

Article image
Bankers and advisers would net £275m from Morrisons takeover
Documents reveal fees US private equity firm Fortress proposes for financing deal and for broking and legal advice

Jasper Jolly

22, Jul, 2021 @8:57 AM

Article image
Morrisons writes to reassure anxious UK farmers over US takeover
CEO’s letter to 3,000 suppliers reaffirms grocer’s unique dealings with British agriculture

Joanna Partridge

11, Jul, 2021 @3:56 PM

Article image
Morrisons’ new owner has plenty of wriggle room in takeover terms | Nils Pratley
CD&R has made fine-sounding pledges but they don’t stop this being yet another debt-fuelled buyout

Nils Pratley

04, Oct, 2021 @6:16 PM

Article image
Labour urges government to protect Morrisons in potential private equity takeover
Opposition MPs say ministers must stop company falling victim to asset-stripping as share price rises

Rob Davies

22, Jun, 2021 @6:23 PM

Article image
Apollo lands with the frontrunner in Morrisons takeover mission
By dropping solo bid plan and teaming up with Fortress, private equity firm is just one of the crew

Nils Pratley

20, Jul, 2021 @7:06 PM

Article image
Morrisons suitor CD&R given more time to make rival offer
UK’s Takeover Panel says private equity group has until 5pm on 20 August

Joanna Partridge

09, Aug, 2021 @7:47 AM

Article image
Sainsbury’s shares rise as it is tipped as next takeover target
US company Fortress, which missed out on Morrisons, has said it is still eager to buy a UK firm

Kalyeena Makortoff

04, Oct, 2021 @3:33 PM

Article image
Legal & General warns over private equity interest in Morrisons
Comments seem critical of takeover practices commonly associated with sector

Jasper Jolly and Kalyeena Makortoff

05, Jul, 2021 @5:11 PM