Morrisons’ biggest shareholder rejects Fortress £6.3bn bid

By James Ridler contact

- Last updated on GMT

Silchester International said it was ‘not inclined to support’ Fortress' takeover of Morrisons
Silchester International said it was ‘not inclined to support’ Fortress' takeover of Morrisons

Related tags: Mergers and acquisitions

Morrisons’ largest shareholder has rejected the proposed £6.3bn Fortress offer for the supermarket chain, hoping to draw out a better deal from other parties.

Silchester International – which holds a 14.14% stake in the supermarket – said it was ‘not inclined to support’ the takeover led by Fortress Investment Group, via its vehicle Oppidum Bidco. Shareholders are due to vote on the offer next month (16 August).

A statement issued by the investment firm read: “Silchester encourages Morrisons' board to allow more time to respond to other parties who might offer better value to Morrisons' public shareholders.”

In the wake of this statement, Singapore's GIC Special Investments Private Ltd has thrown its weight behind the Fortress bid in the form of investment vehicle Cambourne Life Investment Private Ltd. The backer has declared its intention to put £100m towards the offer, which totals £9.5m including debt repayment.

Meanwhile, Clayton, Dubilier & Rice (CD&R), which posted a 230p per share offer for Morrisons following the Fortress announcement, which has been rejected by Morrisons. CD&R has until 9 August to respond with a better offer.

Takeover deal

Morrisons announced on 3 July that the board ‘unanimously agreed’ to the takeover offered by Fortress, CPPIB, and Koch Real Estate Investments, which valued the business at 254p-per-share – about £6.3bn. The total £9.5bn deal would also include payment of net debt of £3.2bn.

Speculation surrounding the future of Morrisons has laid rise to a potential bidding war, with the likes of Apollo Global Management throwing its hat in to the ring.

The group announced – together with its subsidiaries – it was in the preliminary stages of evaluating a possible offer for the supermarket chain, but no offer had been made as of yet.

Chris Elliott, head of market insights at Edge by Ascential, said questions still remained surrounding other rival looking to outbid Fortress.

Unanswered questions

“With Apollo considering a bid, there is still one unanswered question of whether Amazon will enter the fray,”​​ he said. “Amazon and Morrisons have had a partnership since 2016 and there has always been speculation that Amazon would bid for the supermarket to significantly expand its grocery offering.

“It may then feel the pressure to bid but given its acquisition of Whole Foods in the US, it may be looking for a more premium retailer and while it could be tricky, Sainsbury’s is arguably now its best option if it wants to enter the market via a takeover.”

Meanwhile, Griffith Foods has acquired ingredients supplier The Flavourworks for an undisclosed sum, as it continues to strengthen its position within the UK market.

Related topics: Operations

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