By James Davey
LONDON (Reuters) – Morrisons has agreed to a takeover offer from Fortress Investment Group, which values Britain’s fourth-largest supermarket operator at 6.3 billion pounds ($ 8.7 billion) and spearheads a rival proposal from a US private equity firm. .
Fortress’s offer, which is backed by the Canada Pension Plan Investment Board and Koch Real Estate Investments, beats a £ 5.52 billion proposal from Clayton, Dubilier & Rice (CD&R), which Morrisons rejected on June 19. , saying it was too low.
“Morrisons directors believe that the offering represents a fair and recommendable price to shareholders that recognizes Morrisons future prospects,” said Chairman Andrew Higginson.
“We have carefully considered Fortress’s approach, its plans for the business and its overall suitability as a single British food manufacturer owner and trader with over 110,000 colleagues and a significant role in British food production and agriculture.” He said. .
Fortress is a global investment manager with approximately $ 53 billion in assets under management as of March.
“We are committed to being good stewards of Morrisons to better serve their stakeholders and the general British public, over the long term,” said Managing Partner Joshua A. Pack.
Under the terms of the deal, which the Morrisons board recommends to shareholders, investors would receive 254 pence per share, comprising 252 pence in cash and a cash dividend of 2 pence.
Morrisons, based in Bradford, in the north of England, started as an egg and butter trader in 1899. Now it only trails the market leader Tesco (OTC :), Sainsbury’s and Asda in annual sales.
Morrisons owns 85% of its nearly 500 stores and has 19 mostly wholly-owned manufacturing sites. It is unique among British supermarkets in that it produces more than half of the fresh food it sells.
It said the offering represents a 42% premium over its closing price of 178 pence on June 18, the last business day before CD & R’s proposal.
Morrisons shares closed at 243 pence on Friday, valuing the business at 5.8 billion pounds.
CD&R did not immediately comment.
Under UK procurement rules, CD&R has until July 17 to come back with a firm offer.
Morrisons has a partnership agreement with Amazon (NASDAQ 🙂 and it has been speculated that he could also emerge as a potential bidder.
Morrisons said an initial unsolicited proposal was received from Fortress on May 4 at 220 pence a share. This offer was not made public. Fortress then made four subsequent bids before its offering reached a total value of 254 per share on June 5.
The Fortress deal underscores the growing appetite for UK supermarket groups, seen as attractive due to their cash generation and freehold assets.
In February, Zuber and Mohsin Issa and private equity firm TDR Capital bought a majority stake in Asda from Walmart (NYSE 🙂 in a deal that valued the UK grocery store at 6.8 billion pounds.
That transaction came after Sainsbury failed to take over Asda after the British competition regulator blocked a deal agreed in 2019.
In April, Czech billionaire Daniel Kretinsky increased his stake in Sainsbury’s to nearly 10%, prompting speculation about the offers.
($ 1 = 0.7235 pounds)