Morrisons has agreed to a takeover under SoftBank-led Fortress Investment Group, which estimates Britain’s fourth-largest supermarket chain at 6 6.3 billion ($ 8.7 billion) and is at the top of a competitive bid from an American private equity firm.
The offer from Fortress, along with the Canada Pension Plan Investment Board and Koch Real Estate Investments, exceeds the 5 5.52 billion bid from Clayton, Dubilier & Rice (CD&R), which Morrisons rejected on June 19. .
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However, it was less than the ,5 6.5 billion demanded by Morrisons top investor JO Hambro last week.
Shareholders will vote for the Fortress bid, which gives the supermarket chain a business value of ,5 9.5 billion when net debt of 2 3.2 billion is taken into account.
According to UK acquisition rules, CD&R has until July 17 to return with a fixed bid. CD&R declined to comment. Analysts have also speculated that other private equity groups and Amazon, which has a partnership with Morrisons, could be embroiled in a potential bidding war.
The Fortress deal underscores the growing appetite for private equity for UK supermarket chains, which are seen as attractive because of their cash-generating and asset-generating assets.
“We have looked very closely at the Fortress approach, their business plans and overall suitability as the owner of a unique British food maker and tradesman with more than 110,000 colleagues and an important role in British food production and cultivation,” said Andrew Morrisons, President Higginson.
“It is clear to us that the Fortress has a full understanding and appreciation of the fundamental character of the Morrisons.”
Fortress, an independent subsidiary of SoftBank Group Corp. in Japan, has been a global investment manager with assets under management of approximately $ 53 billion since March. Bought the British wine seller Majestic Wine in 2019.
“We are committed to being a good Morrisons manager to better serve stakeholders, and the wider UK public, in the long run,” said Managing Partner Joshua A Pack.
However, Britain’s opposition Labor Party has called for closer control of the government.
“Ministers urgently need to work with the Morrisons and the consortium to ensure that critical commitments to protecting the workforce and retirement status are legally binding and met,” said Labor spokeswoman Seema Malhotra.
Fortress plans to maintain Bradford, north of England, Morrisons headquarters and the existing management team led by CEO David Potts and implement its existing strategy. Transactions for the sale of materials and rental are not planned.
Potts would make 9 9.2 million by selling his stake in Fortress, while chief executive Trevor Strain would make 3, 3.6 million.
Under the terms of the deal, which Morrisons board recommends to shareholders, investors will receive 254 pence per share – 252 pence in cash and a special dividend of 2 pence. The CD & R proposal was 230 pence per share.
Morrisons started as an egg and butter trader in 1899. Now it only follows the British market leader Tesco, Sainsbury and Asda in annual sales.
Morrisons owns 85 percent of its nearly 500 stores and has 19 major on-site facilities. It is unique in British supermarkets in producing more than half of the fresh food it sells.
He said the Fortress offer represented a 42% premium on the closing share price of 178 pence on June 18 – the day before the CD&R proposal. The share closed at 243 pence on Friday.
Morrisons said an initial unsolicited offer was received from Fortress on May 4 at 220 pence per share. This offer was not made public. Fortress then submitted four subsequent bids, before offering a total value of 254 per share on June 5.
The Morrisons bids follow the February acquisition by Zuber and Mohsin Issa and the private company TDR Capital with a majority stake in Asda from Walmart. The deal valued Asda at ,8 6.8 billion.
The deal followed Sainsbury’s failure to take over Asda following the blocking of an agreed deal by Britain’s competition regulator in 2019.
In April, Czech billionaire Daniel Kretinski increased his stake in Sainsbury’s to almost 10 percent, prompting speculative bids.