Morrisons bidding war on the horizon

By James Ridler contact

- Last updated on GMT

Morrisons to face a bidding war, with Clayton, Dubilier & Rice set to jump in the ring
Morrisons to face a bidding war, with Clayton, Dubilier & Rice set to jump in the ring

Related tags: Mergers and acquisitions

A bidding war for big four supermarket Morrisons is likely to begin, after reports private equity firm Clayton, Dubilier & Rice (CD&R) is poised to launch a counter-bid for the business.

CD&R is understood to have been preparing equity and debt financing for a counter-bid that could come ‘as soon as this week’, according to The Sunday Times​.

Should it succeed, the private equity group would partner with Motor Fuel Group – a partner of the supermarket since 2015 – to open Morrisons convenience stores at more than 900 petrol stations.

Julian Wild, corporate finance director at Rollits, said it was highly likely that CD&R would come back with a higher offer.

‘Strong strategic reasons’

“They have strong strategic reasons for wanting Morrisons to complement their Motor Fuel Group business and with Sir Terry Leahy on board they will be hard to deny,”​ he explained.

“Morrisons’ largest shareholder has expressed doubts that any bidder can bring more to the party than the company can achieve on its own. But money talks and management appear committed to a sale.”

Last week, 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).

Forgone conclusion

However, the sale of Morrisons appeared to be a forgone conclusion with little hope of it remaining a public company, much to Wild’s disappointment.

“It does seem ironic that, on the back of Brexit supposedly being all about ‘taking back control’, we may well see control of a major British retailer ceded to a US private equity firm,”​ he added. “Is that a Brexit bonus?”

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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