Morrisons rejects £5.5bn takeover bid
MORRISONS has rejected a £5.5billion takeover proposal from a US private equity firm, saying the sum fell well short of a fair price for the supermarket chain.
Clayton, Dubilier & Rice (CD&R), where former Tesco boss Sir Terry Leahy, inset, is an advisor, confirmed it had put in a proposed deal and was considering making a formal offer.
Morrisons said: “The board of Morrisons evaluated the conditional proposal together with its financial adviser, Rothschild & Co, and unanimously concluded that the conditional proposal significantly undervalued Morrisons and its future prospects.
“Accordingly, the board rejected the conditional proposal.”
Morrisons said the proposed conditional cash offer of 230p per share valued it at just over £5.5billion.
CD&R confirmed it was “considering a possible cash offer” and under UK takeover rules has until July 17 to announce a firm intention to make an offer.
But the firm added there was “no certainty an offer will be made”.
Morrisons is Britain’s fourth largest grocer with 10 per cent of the market, behind the 14.4 per cent share of Asda. Morrisons has about 500 stores and 118,000 staff, making it one of the nation’s biggest private sector employers. There has been speculation about bids for Morrisons in the past from Amazon, which sells the supermarket’s products on its site. In March, the supermarket reported a halving of annual profit due largely to costs incurred during the pandemic, but forecast a bounce back in the 2021-22 year.
Last month, Morrisons said sales in the 14 weeks to May 9 grew 2.7 per cent, excluding fuel. There was a 113 per cent jump in online sales.
The supermarket said it had to spend an extra £27million in Covid19 costs to cover for staff absences and store marshals.
When at Tesco, Mr Leahy was the boss of Andrew Higginson and David Potts, who are now Morrisons’ chairman and CEO respectively.
In February, Zuber and Mohsin Issa and private equity firm TDR Capital bought a majority stake in Asda from Walmart in a deal valuing the UK supermarket group at £6.8billion.