Morrisons agrees £7bn takeover offer from CD&R

Bradford-based supermarket giant Morrisons has agreed a takeover offer worth £7 billion from US private equity group Clayton, Dubilier & Rice (CD&R).

The Morrisons board scrapped its earlier recommendation of a £6.7 billion bid from a consortium led by Fortress Investment Group.

CD&R’s offer is worth 285p a share in cash, trumping the 272p a share cash offer from the Fortress group.

Morrisons’ directors now intend to recommend unanimously that Morrisons shareholders vote in favour of the CD&R offer at a meeting in October.

Fortress said in a statement it is considering its options and that shareholders of Morrison should “take no action.”

Morrisons shares rose again to around 291p, suggesting some investors expect an even higher bid.

Analysts have speculated that Amazon, which already has a partnership deal with Morrisons, could enter the bidding for the Bradford firm.

Fortress, a subsidiary of SoftBank Group, is backed in its proposed deal by a consortium that includes the Canada Pension Plan Investment Board (CPP Investments), Koch Real Estate Investments and Cambourne Life Investment, an investment vehicle of Singapore’s sovereign wealth fund GIC.

Morrisons chair Andrew Higginson said: “The Morrisons board believes that the offer from CD&R represents good value for shareholders while at the same time protecting the fundamental character of Morrisons for all stakeholders.

“CD&R have a strong record of developing, strengthening and growing the businesses that they invest in and they share our vision for Morrisons’ future.

“This, together with the strong set of intentions that they have set out today, gives the Morrisons board confidence that CD&R will be a responsible, thoughtful and careful owner of an important British grocery business.”

Former Tesco Plc CEO Terry Leahy, senior adviser to CD&R funds, said: “CD&R is delighted to have the opportunity to support the management of Morrisons in executing their strategy to grow and develop the business.

“The grocery sector in the UK is undergoing great change and we believe Morrisons is well placed, with CD&R’s support, to succeed in this environment.

“CD&R values Morrisons’ distinctive business model and is committed to supporting it, including the successful ESG and broader stakeholder engagement strategies of the company that are essential to its continued success.”

CD&R said: “The CD&R offer value … will be financed from a combination of equity capital to be invested by CD&R Fund XI, Ares European Direct Lending and Alternative Credit Funds and West Street Strategic Solutions, and committed financing provided by Goldman Sachs Bank USA, BNP Paribas SA, Bank of America, N.A., London Branch, and Mizuho Bank, Ltd …”

About the Author

Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.