Morrisons seals £7 billion takeover deal with US private equity group | Morrisons

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Morrisons has agreed to a £7 billion takeover deal by US private equity group Clayton, Dobellier and Rice in the latest round of a fierce battle for control of the country’s fourth-largest supermarket chain.

The Bradford-based grocer confirmed Thursday night that it had accepted an improved offer of 285 pence per share from the private equity firm that had successfully improved the offer on the table from rival Fortress.

In June, CD&R put Morrisons into action after its original approach of 230p per share – worth £5.5bn – emerged and was rejected on the grounds that it had “significantly undervalued” the retailer.

Its new offer is a 60% premium to Morrisons’ share price on June 18, the day before news of bidding interest in the company was announced.

Andrew Higginson, president of Morrisons, said CD&R’s offering represents “good value for shareholders while at the same time protecting the core character of Morrisons for all stakeholders.”

“CD&R has a strong track record of developing, promoting and growing the businesses in which they invest,” Higginson said. “This, combined with the set of strong intentions they have set out today, gives the Board of Directors confidence that CD&R will be a responsible, thoughtful and meticulous owner of an important British grocery company.”

Sir Terry Leahy, former CEO of Tesco, is a senior advisor to CD&R. He worked alongside Higginson and David Potts, CEO of Morrisons, during his long tenure at Tesco.

In a video message, Leahy described Morrisons as “a great company with a great future.” He said CD&R was excited to work with Potts and the rest of the management team “to bring more success to all our stakeholders.”

Unions are concerned about the current wave of private equity takeovers sweeping across British companies, amid fears companies are being divested, overburdened with debt, and conditions for workers deteriorating.

However, Leahy said he knew the late Morrison’s founder, Sir Ken Morrison, and “understood the vision and values ​​upon which he built his business,” which Potts had championed.

As part of the terms of the deal, CD&R promised that the company’s head office would remain in Bradford. She said she had no plans to sell her valuable store holdings to raise money, and that she fully supports Morrisons’ latest pay bonus of at least £10 an hour to all colleagues in department stores and manufacturing sites. Nor does it intend to make any change in the benefits offered by the pension systems.

Leahy said CD&R was excited to work with the current management team “to not only preserve Morrisons’ traditional strengths but actually build on them through innovation, capital and new technologies.”

“Our whole approach as a company over the past four decades has been to build and grow the businesses that we invest in. We know that customers love Morrisons and that the company’s managers and employees try to provide better customer service every day… We at CD&R are determined to help them do just that with all their might. possible way.”

CD&R’s bid beats the £6.7 billion on the table from US rival Fortress. Earlier this month, the investment group, which already owns Majestic Wine, and is itself owned by Japanese investment firm SoftBank, attempted to stymie CD&R by increasing its bid to 270p per share plus an additional 2p per share, an increase of £400m. In its initial offer of 6.3 billion pounds, which was submitted at the beginning of July.

In a statement issued Thursday evening, Fortress noted the developments and said it was “considering its options.”

Fortress increased its offer after Morrisons’ largest shareholder, Silchester International Investors, which holds a 15% stake, said it was “not inclined to support” Fortress Group’s initial 254p share offer. The fund manager said Morrisons’ board should “allow more time to respond to third parties who may provide better value to Morrison’s general shareholders.”

Morrisons’ board of directors withdrew its previous support for the Fortress bid, with shareholders expected to vote on the enhanced CD&R bid in October.

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