UK’s Morrisons agrees to €7.9bn takeover offer from Fortress-led group

British supermarket group Morrisons has agreed to an improved takeover offer worth £6.7 billion (€7.9 billion) in cash from a consortium led by Fortress Investment Group, though its shares were trading above the level of the new bid.

That indicated investors were still hoping for a counter bid from US private equity group Clayton, Dubilier & Rice (CD&R).

Softbank-owned Fortress said its raised offer comprises 270 pence per Morrisons share plus a 2 pence a share special dividend and was aimed at warding off its rival suitor.

Fortress “remains committed to becoming the new owner of Morrisons and to being a responsible long-term steward of this great British company through the next stage of its evolution,” it said.

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Morrisons said its board had re-confirmed its unanimous recommendation of the offer. It had previously agreed a Fortress offer worth 254 pence a share or a total of £6.3 billion on July 3rd.

However, major Morrisons investors Silchester, M&G and JO Hambro all indicated that offer was too low.

None of those investors had any immediate comment on Fortress’s new offer.

CD&R had a 230 pence a share proposal worth £5.52 billion rejected by Morrisons on June 17th.

Britain’s Takeover Panel, which regulates corporate takeovers, has set an August 9th deadline for CD&R to respond, though that deadline could be extended if all parties agree.

Shares in Morrisons were up 2.2 per cent at 278.15 pence by 1.17pm – a premium to the latest offer – on hopes that CD&R will respond. CD&R declined to comment.

Fortress’s increased offer represents a premium of 52 per cent to Morrisons’ closing share price of 178 pence on June 18th – the day before CD&R went public with its proposal.

Vote

Shareholders in Morrisons are due to vote on the Fortress offer on August 16th.

To pass, the offer needs the support of shareholders representing at least 75 per cent in value of voting investors at the meeting.

Analysts have speculated that Amazon, which has a partnership deal with Morrisons, could still enter the fray.

The Fortress consortium, which also includes Canada Pension Plan Investment Board, Koch Real Estate Investments and Singapore’s sovereign wealth fund GIC, intends to retain Morrisons’ Bradford, England, headquarters and its existing management team led by chief executive David Potts and execute its existing strategy. Material store sale and leaseback transactions are not planned.

Morrisons has described the consortium as suitable owners for a business with more than 110,000 staff and a deeply integrated supply chain, that includes its own meat- and fish-processing sites.

Morrisons is unique among British supermarkets in making half of the fresh food it sells. – Reuters