Singapore’s GIC joins Fortress-led Morrisons bid

Cambourne Life Investment, an investment vehicle of Singapore’s sovereign wealth fund GIC, has joined the consortium led by Fortress Investment Group which has agreed a £6.3 billion takeover of Bradford-based supermarket giant Morrisons.

Fortress said Cambourne agreed to join its bid as “an additional co-investor”  and to “provide financing … in respect of the Fortress offer.”

The Fortress offer agreement for Morrisons includes a scheme of arrangement with a 75% hurdle for shareholder acceptance.

Morrisons’ biggest shareholder, Silchester International Investors LLP, has already said it is “not inclined” to support the deal because there is “little in the recommended offer that could not be achieved by Morrison as a listed company.”

Silchester has a stake of more than 15% of Morrisons.

“In this particular case, the scheme of arrangement has enabled the adoption of a short timetable, giving insufficient opportunity for competing bids to emerge,” said Silchester in a statement.

Silchester said it encourages the Morrisons board to “allow more time to respond to other parties who might offer better value to Morrison’s public shareholders.”

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

US private equity firm Apollo Global Management has also said it is in talks to join the Fortress consortium.

The board of Morrisons said on July 3 it agreed to a takeover offer from a trio of investors led by Fortress 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 £2.66, suggesting that investors may expect a higher bid to emerge.

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

Fortress said in a stock exchange statement on Wednesday: “Today, Bidco is pleased to announce that Cambourne Life Investment Pte Ltd has agreed to join the investment group led by Fortress as an additional co-investor, alongside CPP Investments and KREI, and to provide financing to Bidco in respect of the Fortress Offer.

“Cambourne is a nominated investment vehicle of GIC Special Investments Pte Ltd, which is a direct subsidiary of GIC Pte Ltd (GIC).

“Accordingly, Fortress has syndicated a portion of its funding commitment in respect of Bidco to Cambourne and Cambourne has entered into an equity commitment letter in favour of Bidco …

“In addition, Cambourne has entered into a deed of adherence to the Bid Conduct Agreement pursuant to which Cambourne has adhered to the Bid Conduct Agreement in the capacity of a co-investor and the parties have agreed to make certain amendments to the terms of the Bid Conduct Agreement …

“As at the close of business on 26 July 2021 (being the latest practicable date prior to this announcement), GIC held 5,180,094 Morrisons shares, representing approximately 0.21 per cent. of the issued share capital of Morrisons as at that date.”