With a bid of £7bn, a US private equity firm won the auction for Morrison’s supermarket group.
Clayton, Dubilier & Rice (CD&R), offered 287 pence per share, which is a premium of about 61% over the closing price of the company before the offer period started.
Morrisons is Britain’s fourth-largest supermarket in terms of market share, behind market leaders Tesco, Sainsbury’s, and Asda.
The business was founded in Bradford in 1899 as an egg and butter dealer.
The fight for Morrisons was the most prominent among a number of bids for British businesses this year. It reflects private equity’s desire for cash-generating assets.
Because neither bidder had made their final offers, the Takeover Panel, which oversees M&A deals in Britain moved to an auction.
Panel members ruled that the US firm beat a consortium headed by Softbank’s Fortress Investment Group. They had previously offered 286 pence.
The board of Morrisons has unanimously recommended to shareholders that they accept the new offer at their meeting of 19 October.
CD&R could take over Morrisons if shareholders approve the offer. This could happen by the end of the month.
Sir Terry Leahy, former chief executive of Tesco, is the leader of CD&R’s bid group.
Sir Terry stated: “We are pleased by the Morrisons Board’s recommendation and look forward to the shareholder vote to approve this transaction.
He said, “We believe Morrisons remains an excellent business with a strong management team and a clear strategy. It also has good prospects.”
Joshua A. Fortress managing partner Joshua A.
“The UK continues to be a very attractive investment location from many perspectives. We will continue to look for opportunities to assist strong management teams to grow and create long-term value.”
Morrisons reported last month a 43% decline in half-year profits. COVID-19 cost increases have taken their toll. They also warned of rising prices and product shortages due to current supply chain strains.
