(Bloomberg) – Fortress Investment Group has agreed to buy Wm Morrison Supermarket Plc for about 6.3 billion pounds ($ 8.7 billion), beating a previous offer from Clayton Dubilier & Rice.
The all-cash deal from a group led by Fortress, a subsidiary of SoftBank Group Corp., follows the UK supermarket chain’s rejection of the £ 5.5bn CD & R offer last month. It is the latest in a wave of mergers in the UK retail sector in recent years.
“Morrison’s directors believe that the offer represents a fair and recommendable price for shareholders that recognizes Morrison’s future prospects,” said the grocer’s president, Andrew Higginson, in a statement.
Within a highly competitive and low-margin market, UK grocery stores are grappling with increased online shopping, as well as challenges from German discount stores Aldi and Lidl, although they have weathered the pandemic better. than other retailers.
Under the terms announced in Saturday’s statement, for each Morrison share, holders will receive 252 pence in cash and a special dividend of 2 pence.
The offer represents a premium of approximately 42% over Morrison’s closing price of 178 pence per share as of June 18, the last trading day before the start of the offering period, and a 41% premium over the closing price. volume weighted average. of 180 pence per share for the three-month period ended June 18.
Fueled by recent interest, Morrison closed at 239.8 pence a share on Friday, above CD & R’s offer of 230 pence a share.
Investors are looking to capitalize on the improving fortunes of supermarkets after the closures triggered an increase in spending on groceries in stores and online. Because they were allowed to stay open as essential retailers, Morrison and competing UK supermarkets, including Tesco Plc and J Sainsbury Plc, have performed better than other stores.
Private equity investors have turned to the sector, with Britain’s third-largest grocery store, Asda Group Ltd., taken over by TDR Capital and the Issa brothers in a £ 6.5bn deal. Walmart Inc., the US retailer that owned Asda since 1999, retains a minority stake. The Asda transaction came two years after regulators blocked an earlier attempt by Walmart to sell the business to the UK grocery store’s biggest rival, Sainsbury.
The acquisitions of British supermarkets are not without criticism. British lawmaker Darren Jones wrote to Andrea Coscelli, chief executive of the Competition and Markets Authority, to ask if regulators have powers “to intervene when new owners act irresponsibly.”
Labor MP Jones, chairman of the corporate, energy and industrial strategy selection committee, cited concerns about what the acquisitions “could mean for the protection of jobs, pension funds and the presence of supermarkets on British main streets.”
Fortress, whose other UK retail assets include Majestic wine stores, said it intends for Morrison to continue to operate as a separate business with its head office in Bradford, England, and led by its current management team. In its statement, the firm also pledged to support recent salary increases, pensions and supplier agreements.
© 2021 Bloomberg LP