JO Hambro Capital Management, a top 10 shareholder in Bradford-based supermarket giant Morrisons, has called on US private equity firm Clayton, Dubilier & Rice (CD&R) to increase its offer for Morrisons to around £6.5 billion.
JO Hambro said in a statement: “While we accept the Morrisons board was correct to reject the recent 230p per share offer by CD&R, in our view there is validity to a bid for the supermarket group.
“Specifically, we believe any offer for the group approaching 270p per share merits engagement and consideration.”
Shares of Morrisons have soared to around 241p following the news last month that it rejected a proposed £5.5 billion cash takeover offer from CD&R pitched at 230p a share.
CD&R, which has former Tesco boss Terry Leahy as a senior adviser, now has until 5pm on July 17 to either announce a firm intention to make a firm offer for Morrisons or announce that it does not intend to make an offer.
JO Hambro said it noted CD&R’s existing ownership of petrol forecourt group Motor Fuels Group (MFG).
It said if CD&R bought Morrisons, the combined group would have around 1,200 forecourt sites across the UK.
“The fuel purchasing and food retailing synergies here are clear to see,” said JO Hambro.
“But CD&R should pay a fair price in order to access those synergies.”
Analysts expect CD&R to return with a higher offer and believe other potential buyers could also be flushed out, including Amazon, which already has a partnership deal with Morrisons.
Last week, Legal & General Investment Management (LGIM), another top 10 shareholder in Morrisons, said it did not expect a bid at 230p to succeed.