Morrisons takeover battle to go to auction next month
UK supermarket group being pursued by two rival consortiums
Wm Morrison has said that a takeover battle between rival groups will go to a panel-arranged auction next month since neither has declared their offers for the UK supermarket chain final.
It is the second time the UK’s takeover regulator has stepped in to order an auction in recent months. The contest between private equity group Carlyle and cigarette maker Philip Morris International over inhaler manufacturer Vectura was settled the same way.
Private equity firm Clayton, Dubilier and Rice has made a £10.2bn offer for Morrisons but is facing a rival consortium led by Fortress Investment Group.
“The board of Morrisons has engaged with the panel executive together with Market Bidco and Fortress Bidco in order to begin discussions around an orderly framework for the resolution of this competitive situation,” Morrisons said on Wednesday.
Morrisons’ stock is at 291p, above the 285p per share that private equity group CD&R offered last month. The bid, a substantial increase from its initial 230p approach, has secured a recommendation from the grocer’s directors.
Fortress Investment Group, which is owned by Japan’s SoftBank, bid 270p and said last month it was “considering its options” following the CD&R proposal.
A document containing further details of the Clayton, Dubilier and Rice offer will be posted to Morrisons’ shareholders “on or around September 25”, the supermarket said, adding that this will provide “sufficient time” to resolve the situation.
Morrisons added that it “continues to place very significant emphasis on the wider responsibilities of ownership of Morrisons” including the interests of suppliers, customers and staff.
As the bidding war heated up, analysts have expressed doubts that either suitor could make a return on the company without selling off assets — possibly including some of its freehold stores, food manufacturing sites or warehouses.
The trustees of the group’s pension funds have also warned that the high levels of indebtedness inherent to both bids would weaken the covenant of the schemes. Talks are under way with both about how to mitigate this.