£7bn takeover fight for Morrisons heads to auction

The £7 billion takeover battle for Bradford-based supermarket giant Morrisons between two US private equity groups looks set to be decided by the rarely used auction process.

Morrisons said on Wednesday it is in talks with Clayton, Dubilier & Rice (CD&R), Fortress Investment Group and the UK’s Takeover Panel about an auction to settle its future.

Morrisons said that as neither bidder had declared its offer final, it is talking to both of them and the Takeover Panel about “an orderly framework for the resolution of this competitive situation” – which would normally be an auction.

Last month, Morrisons agreed a £7 billion offer from CD&R — which has former Tesco boss Terry Leahy as an adviser — but the Fortress group may raise its offer again.

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

CD&R’s offer is worth 285p a share in cash, trumping the 272p a share cash offer from the Fortress group. Morrisons shares have risen to around 291p, suggesting traders expect a yet higher offer.

Fortress said on Wednesday it “continues to consider its options.”

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

Fortress, a subsidiary of SoftBank Group, is backed 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.

“Following completion of the auction procedure, the Morrisons board anticipates proceeding with either the Fortress meetings or the CD&R meetings depending on which offer it is recommending to Morrisons shareholders,” said Morrisons.

“In addition to the financial terms of any offer, the Morrisons board continues to place very significant emphasis on the wider responsibilities of ownership of Morrisons.

“These responsibilities include a recognition of the importance to the Morrisons business of all stakeholders, including colleagues, customers, pension trustees and suppliers as well as the distinct heritage and history of Morrisons and the legacy of Sir Ken Morrison.”

Morrisons said shareholder meetings to vote on the CD&R offer would be convened for around the week starting October 18.

It said any auction would take place prior to these shareholder meetings, on a date announced by the Takeover Panel.