Apollo may join £6.3bn Fortress-led bid for Morrisons

US private equity firm Apollo Global Management said on Tuesday it is in preliminary talks to join the consortium led by Fortress Investment Group which has agreed a £6.3 billion takeover of Bradford-based supermarket giant Morrisons.

Apollo said it does not intend to make an offer for Morrisons other than as part of the Fortress-led consortium.

The board of Morrisons said on July 3 it agreed to a takeover offer from a trio of investors led by Fortress Investment Group which values the share capital of the Bradford-based supermarket giant at £6.3 billion.

Under the terms of that deal, Morrisons shareholders, who must approve the deal, would receive £2.52 in cash and a 2p special dividend for each Morrisons share.

The £2.54-per-share cash offer exceeded an earlier £5.5 billion cash takeover approach from US private equity firm Clayton, Dubilier & Rice (CD&R) pitched at £2.30 a share, which Morrisons rejected.

Morrisons shares have risen to around £2.62.

Fortress, an independently-operated subsidiary of SoftBank Group, is backed in the deal by the Canada Pension Plan Investment Board (CPP Investments) and Koch Real Estate Investments.

The Fortress-led deal would value Morrisons at £9.4 billion after including net debt and leases worth £3.2 billion.

On Tuesday, Apollo said: “Apollo Global Management, Inc. confirms that it is in the preliminary stages of discussions with Fortress Investment Group, LLC regarding the recommended offer for Morrisons by Oppidum Bidco Limited (a company owned by funds managed or advised by Fortress), which may result in funds managed or advised by Apollo forming part of the investment group led by Fortress for the purposes of the Fortress Offer.

As a consequence of these discussions, Apollo confirms that it does not intend to make an offer for Morrisons other than as part of the Fortress Offer.

“This is a statement to which Rule 2.8 of the City Code on Takeovers and Merger applies.

“The Panel on Takeovers and Mergers has confirmed to Apollo that this statement and the restrictions in Rule 2.8 of the Code will not restrict Apollo from entering into a transaction with Fortress in relation to Morrisons as part of the Fortress Offer.

Under Note 2 on Rule 2.8 of the Code, Apollo (and any person acting in concert with it) reserves the right to set aside the restrictions in Rule 2.8 with the agreement of the board of directors of Morrisons to the extent such agreement is given after the Fortress Offer is withdrawn or lapses.

There can be no certainty that any transaction will be entered into by funds managed or advised by Apollo in relation to the Fortress Offer, nor as to the terms of any such transaction.

Apollo notes Fortress’s intentions regarding the Morrisons business and all its stakeholders, as set out in the announcement of the Fortress Offer pursuant to Rule 2.7 of the Code on 3 July 2021. 

“Should these discussions lead to any transaction, Apollo would be fully supportive of Fortress’s stated intentions regarding Morrisons.”