FILE PHOTO: A flag hangs outside a Morrisons supermarket in New Brighton, England, on July 5, 2021. Reuters / Phil Noble / FILE PHOTO
2 October 2021
Sarah Young and James Davey
LONDON (Reuters) – A six-month battle between British supermarket chain Morrisons will launch an auction on Saturday to decide who will win the $10 billion, the results of which will be announced later.
US private equity group Clayton, Duville & Rice (CD&R) will face a consortium led by SoftBank’s Fortress Investment Group in a one-day auction.
The Morrison board recommended a 285-pence stock bid in August, and CD&R was advised by Terry Lee Hee, former CEO of the UK’s largest supermarket chain Tesco.
Based in Bradford, northern England, Morrison started out as an egg and butter merchant in 1899. Listed in 1967, it is the fourth largest grocery store in the UK after market leaders Tesco, Sainsbury’s and Asda.
Morrison’s fight has attracted the most attention in a series of bids by British companies this year, indicating private equity’s desire to raise funds.
The acquisition panel, which oversees the process of M&A transactions in the UK, has gone to auction as no bidder has declared a final offer.
The competition consists of up to 5 rounds.
Firstly, both the bidders can raise their offers. In case neither of the two is the case, the existing accepted offer of CD&R shall prevail.
If there are more bids in Round 1, other bidders can raise their offer in Round 3.
If there is still no winner, both proposers can raise their bids in the fifth final round.
To prevent a draw, Fortress’ fifth round offer must be an “even” pence and CD&R must bid with “odd” pence.
The panel will issue a statement when the auction is complete, and Morrison will need to make recommendations by Tuesday, but may issue a statement as soon as Saturday after the board meeting.
Morrison’s shares closed at 297p on Friday. This shows that investors are expecting higher bids.
CD&R and Fortress both maintain Morrison’s Bradford headquarters and current management team led by CEO David Potts, execute strategies, do not sell freehold store real estate, and maintain staff pay rates. I promised.
However, the commitments are not legally binding.
(Reporting by James Davey and Sarah Young, Edited by Alexander Smith)