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Morrisons strikes £7 billion takeover deal with US private equity group

Tom Shearsmith
20 August 2021

British supermarket Morrisons has confirmed it has agreed a takeover offer worth £7 billion ($9.54 billion) from US private equity group Clayton, Dubilier & Rice.

The CD&R offer value represents a premium of approximately 60% to the Closing Price of 178 pence per Morrisons Share on 18 June 2021 (being the last business day prior to 19 June 2021, the date of the announcement of a possible offer by CD&R for Morrisons and the commencement of the offer period).

Last month, Morrisons turned down an offer worth £5.5 billion from CD&R, arguing that it significantly undervalued the value of the business.

CD&R's offer represents its belief that Morrisons is a high quality business that is well-positioned within UK grocery and led by a strong management team. CD&R also recognises the strength of Morrisons' heritage, the legacy of Sir Ken Morrison and its long-term track record of working with and for customers and stakeholders.

The supermarket's directors intend to recommend unanimously that Morrisons shareholders vote in favour of the CD&R offer at an upcoming meeting, both companies confirmed. As a result, the Morrisons said its directors have now withdrawn their recommendation for an earlier bid from a consortium led by SoftBank Group Corp.'s Fortress Investment Group.

In response to its own offer, Fortress said it will consider its options, with a further announcement expected to made in due course.

Commenting on the CD&R Offer, Andrew Higginson, Chair of Morrisons, said: "The Morrisons Board believes that the offer from CD&R represents good value for shareholders while at the same time protecting the fundamental character of Morrisons for all stakeholders. CD&R have a strong record of developing, strengthening and growing the businesses that they invest in and they share our vision for Morrisons' future. This, together with the strong set of intentions that they have set out today, gives the Morrisons Board confidence that CD&R will be a responsible, thoughtful and careful owner of an important British grocery business."

Commenting on the CD&R Offer, Sir Terry Leahy, Senior Adviser to CD&R funds, said: "CD&R is delighted to have the opportunity to support the management of Morrisons in executing their strategy to grow and develop the business. The grocery sector in the UK is undergoing great change and we believe Morrisons is well placed, with CD&R's support, to succeed in this environment. CD&R values Morrisons' distinctive business model and is committed to supporting it, including the successful ESG and broader stakeholder engagement strategies of the company that are essential to its continued success."

Morrison shares rose 4.4% following the announcement, rising to 291.4p per share.

The vote and subsequent announcement is expected around the week starting 4 October 2021.

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