With a 7 billion pound ($9.5 billion) bid, Clayton, Dubilier & Rice (CD&R) has won the auction for Morrisons, opening the way for the US private equity company to acquire control of Britain’s fourth-largest supermarket group.
CD&R offered 287 pence per share, while a group led by Softbank owned Fortress Investment Group offered 286 pence, according to the Takeover Panel, which regulates M&A deals in the UK and organized the auction.
Terry Leahy, the former chief executive of Britain’s largest supermarket chain Tesco, is a senior adviser to CD&R, and his victory marks his triumphant return to the UK grocery business.
Morrisons’ board supported CD&R’s 285 pence per share offer in August, and the winning bid was only marginally higher.
The board is anticipated to recommend that shareholders accept the latest offer at a shareholders meeting scheduled for Oct. 19 when it meets later on Saturday.
Morrisons and CD&R did not respond to requests for comment on the auction’s outcome.
If shareholders approve the deal, CD&R might complete its acquisition of Morrisons by the end of the month, making it the second UK grocery chain to be bought out by private equity in a year, following the takeover of No. 3 player Asda in February.
BUTTER AND EGGS
Bradford is a town in northern England. Morrisons began as an egg and butter distributor in 1899. After Tesco, Sainsbury’s, and Asda, it became Britain’s fourth-largest retailer in 1967.
Morrisons is the most high-profile of a slew of offers for British companies this year, underscoring private equity’s enthusiasm for cash-generating UK properties.
Morrisons’ Bradford headquarters and management team, led by CEO David Potts, will be retained by CD&R, and the company’s existing plan will be carried out. Morrisons’ freehold retail estate will not be sold, and staff pay rates will be maintained. However, the commitments are not legally binding.
Leahy served as Tesco’s CEO for 14 years, from 2001 to 2011, and will now be reunited with Morrisons CEO Potts and Chairman Andrew Higginson, two of his closest Tesco lieutenants.
Potts, who joined Tesco at the age of 16 as a shelf-stacker, will profit more than ten million pounds from the sale of his Morrisons shares to CD&R. Trevor Strain, the chief operating officer; will earn around 4 million pounds.
Fortress is left to lick its wounds and ponder the saga’s cost. Fortress intended to spend 263.5 million pounds on banking and advisory fees and expenditures, according to documents released in July.
“The UK remains a very attractive investment environment from many perspectives, and we will continue to explore opportunities to help strong management teams grow their businesses and create long-term value,” the group said in a statement.
In recent months, Sainsbury’s has been mentioned as a potential target for private equity and investment firms.
