Private equity takeover of Morrisons could trigger break-up of the grocer

Morrisons launches back-to-school packs for shoppers to donate to help struggling families in time for the new school year.
The Back To School Pick Up Packs contain essential school items.
// 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.


READ MORE:


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.

Click here to sign up to Retail Gazette’s free daily email newsletter

8 COMMENTS

  1. The takeover should be blocked. Its a smash and grab offer by those only interested in how much money could be made out of a breakup and asset stripping.

  2. This takeover is not in the public interest as it reduces potentially competition and leads to higher prices in retail grocery.

    The same the defence takeover of a UK company by a US company is not in the public interest. There’s more importantly implications for jobs as well.

  3. Don’t think morisons should sell they prid themselves as a family friendly shop Americans don’t know anything about British or Welsh values just prophet and job loses to save billions of dollars if morisons sell we will never shop there again

  4. Is it just a coincidence that Morrisons ceo Is due to retire this year and selling off his shares will make a nice retirement package.

  5. Morrison’s was once a great store but has gone down hill over the years. If Sir Ken was alive today he would hit the roof to see his hard work go down the drain. It used to be a family run store but not any more.

  6. One of morrison’s stores has had persistent leaks from its roof going back 15-20 years – still, and all they do is put buckets under the area where the water falls (with H&S signs).

LEAVE A REPLY

Please enter your comment!
Please enter your name here