// New owners of Morrisons could be pressured to to sell off some assets if tabled £6.3bn offer from Fortress increases
// Given the opposition the deal is already facing coupled with a counter-bid in the works, Fortress’ bid might not be approved
// Investors will have their say on the offer at a general meeting on August 16
City analysts have suggested that a successful private equity-led takeover bid for Morrisons could lead to the Big 4 giant being broken up as a business.
According to The Grocer, analysts say that any rise in Fortress’ tabled £6.3 billion bid would put pressure on them to sell off some of Morrisons’ assets, such as the petrol station estate, food factories, warehouses and stores.
The Grocer also reported that it looked “unlikely” Fortress could achieve the minimum 75 per cent shareholder vote needed to gain approval for its takeover, given the opposition the deal is already facing coupled with reports of a impending counter-bid from another private equity firm.
- Morrisons braces for CD&R counterbid
- Bidders expect to clear CMA rules for £6.3bn Morrisons offer
- Singapore’s GIC joins £6.3bn Morrisons takeover deal
Morrisons had rebuffed an initial £5.5 billion approach from CD&R last month, but within days it accepted a higher offer from a consortium led by Fortress, which is also the owner of Majestic Wine.
UK takeover regulators had given CD&R a deadline of August 9 to either place its own firm bid for the chain or walk away.
Reports over the weekend suggested CD&R was now preparing equity and debt financing for a counter-bid, which could come “as soon as this week”.
If successful, the private equity firm would partner with Motor Fuel Group to open Morrisons convenience stores at over 900 petrol stations.
CD&R is also reportedly focusing on how it can use excess space in Morrisons’s sites “more imaginatively”, as advised by former Tesco chief executive Sir Terry Leahy.
Meanwhile, Fortress said it did not expect any delay in proceeding with the agreed takeover – which will go to a shareholder vote next week – after the CMA last week said it had “no further questions” in relation to its offer and had not opened a competition enquiry into the deal.
The bidding consortium is being led by Fortress, along with Singaporean sovereign fund GIC. Another private equity firm Apollo, is still in talks to join the consortium.
Investors will have their say on the offer, which is already supported by the Big 4 retailer’s board of directors, at a general meeting on August 16.
However, a number of major Morrisons shareholders, including its largest investor Silchester International, have criticised the agreed deal.
Last week, Silchester said it would not support the offer and called for more time for other potential bidders to come forward.
Fellow shareholders M&G and JO Hambro have also suggested the consortium’s current bid was valued too low.