Morrisons sale: US company CD&R wins £ 7 billion supermarket auction | Morrisons

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U.S. private equity firm Clayton, Dubilier & Rice (CD&R) is set to take over as new owner of Morrisons after the grocer’s board backs its £ 7.1bn bid for the supermarket chain following a tense auction with a rival suitor.

287p per share bid narrowly beat 286p bid by a consortium led by Softbank-owned Fortress Investment Group on Saturday in a showdown to settle Morrisons’ future.

Morrisons’ board of directors, which met on Saturday afternoon to review the results of the three-round auction, said it would unanimously recommend CD & R’s “top” bid to shareholders, who will vote on the deal later this month. If approved, Morrisons will become a private company and will no longer be listed on the London Stock Exchange.

The auction effectively ends a four-month battle for the grocer, which has dragged on since CD&R, advised by former Tesco chief executive Sir Terry Leahy, made an initial approach in June.

“We are satisfied with the recommendation of the Morrisons board of directors and look forward to a shareholder vote to approve the transaction,” Leahy said in a statement. “We continue to believe Morrisons is a great company, with a strong management team, a clear strategy and good prospects.”

The total value of CD & R’s final offering, including debt, is £ 9.8 billion. Supply cannot be increased unless a new suitor appears with a firm offer for the supermarket chain.

Morrisons chairman Andrew Higginson said CD & R’s offer was “excellent value for money” – representing a 61% premium over Morrisons’ closing price of 178p before the company made. its first offering in June – and would protect Morrisons’ “fundamentals for all stakeholders”.

“CD&R have a strong retail background, a solid track record of developing and growing the companies they invest in, and they share our vision and ambition for Morrisons. We remain convinced that CD&R will be a responsible, thoughtful and prudent owner of a major UK grocery company, ”he added. “The Board of Directors is confident that Morrisons will continue to grow stronger under CD&R ownership.

Fortress admitted defeat shortly after the offers went public on Saturday afternoon, with managing partner Joshua Pack saying he wished the company and everyone involved “the best for the future.”

He added: “The UK remains a very attractive investment environment in many ways, and we will continue to explore opportunities to help strong management teams grow their businesses and create long-term value. . ”

CD&R’s 285 pence pre-auction offer had already won the backing of Morrisons board of directors, having promised that the company’s head office would remain in Bradford and confirmed that there were no plans to sell its stores to raise funds.

The private equity firm also said it fully supports Morrisons’ recent salary award of at least £ 10 an hour for all colleagues in stores and manufacturing sites, and has struck a deal with pension administrators in mid-September to provide additional security and support. to the regime, which has 53,600 members. Fortress was reportedly in talks with retirement administrators on Friday with the aim of reaching a similar deal ahead of the auction.

Unions and politicians are worried about the wave of private capital buyouts targeting UK businesses, fearing that companies will be stripped of their property, laden with debt and working conditions deteriorate.

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Morrisons employs around 120,000 people in the UK, including in its 497 supermarkets, as well as in factories, farms and a company-owned fishing trawler.

Saturday’s auction, which was managed by the city’s takeover committee that oversees the UK M&A process, was triggered after none of the bidders declared bids finals in the past four months. In order to avoid a raffle, Fortress had been asked to make a final offer with an “even” number of pence, while CD&R had been asked to make an offer with an “odd” number.

Shareholders will vote on the offer on October 19.


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