The Takeover Panel announced that a five round auction will take place on Saturday 2 October between the two private equity firms, with a result announced next Monday – each round will allow the offerors to increase their bid for the business. However, if neither side increase their offers, the process will be scrapped
Both sides have agreed all bids will be at a fixed cash price and cannot include stakes in other businesses or dividends to shareholders.
“Additionally, in the fifth and final round of the auction procedure, it will be a requirement that any increased bid lodged by Fortress must be at an ‘even’ number of pence and any increased bid lodged by CD&R must be at an ‘odd’ number of pence,” said the Takeover Panel.
The bidding war for Morrisons began in June this year, with Fortress and CD&R going back and forth in their attempts to take over the retailer.
Last month, Morrisons's pension scheme trustees intensified the bidding war by highlighting £800m needed to support employee pensions in addition to the terms of any current offer.
Commenting in the run up to the auction, Rollits corporate finance director Julian Wild said: “Whoever wins the bidding will still have to go to the shareholders for approval, but money talks and it now looks inevitable that the shareholders will vote to sell.
“I have no strong view, but I would probably put my money on the Clayton, Dubilier & Rice bidder. If they want it, I think they have the better credentials.”
Wild said he would be surprised if the price for the retailer skyrockets this weekend, with the bids to date probably not far off from where they need to be.
“What is disappointing for me is to see a Yorkshire-based public company taken over by an American investment group. Brexit was supposed to be about ‘taking back control’ but that now seems to mean ‘handing over control to foreign buyers’,” Wild added.
“The Morrison management may be strongly incentivised to go with the highest bid, but it does not reflect well on management performance that the company was unable to fight off a takeover bid from an overseas buyer.”
“It would be nice to think that the shareholders would reject the winning bid and instead put in place a management team capable of delivering the returns that these American investors believe that they can achieve. But the sorry truth is that shareholders are only interested in short-term gain and unlikely to wait around.”
Meanwhile, last month, Chicken Tonight manufacturer Symington’s was acquired by Italian producer Newlat Food for £53m, as it eyed growth internationally and aimed to transform one of Symington's factories purely into a pasta facility.