Bidding battle for Morrisons
A US private equity firm backed by former Tesco boss Sir Terry Leahy has reignited the Morrisons bidding war by placing an improved £7billion bid for the grocery chain.
Clayton, Dubilier & Rice tabled an increased bid of 285p per share, which was recommended by the supermarket’s board.
This trumped the 272p per share bid from rival US private equity firm Fortress Investment Group, which valued the supermarket at £6.7billion.
Morrisons shares rose 4.4 per cent following the announcement, to 291.4p per share. The board previously backed Fortress but has now switched sides.
Chairman Andrew Higginson said CD&R “will be a responsible, thoughtful and careful owner of an important British grocery business”.
Morrisons was founded in Bradford in 1899 – where it still has its headquarters – and the founderWilliam Morrison’s son, the late Sir Ken Morrison, ran the business for 50 years.
Sir Terry claimed CD&R values Morrisons’ business model and is committed to supporting it. In a video message, he said: “I knew Ken Morrison well and I understood his values and vision”.
CD&R has pledged to open new stores and boost online and wholesale growth, amid concerns over US private equity groups asset-stripping top UK names.
Nicholas Hyett, Hargreaves Lansdown equity analyst, said the Leahy-backed bid may seduce some shareholders who were previously sceptical about whether the firm was being sold at the right price.
He said the bidding war is not over as Fortress urged investors to hold fire on accepting the deal, saying it will make a statement. Mr Hyett said: “With shares currently trading above the new and improved offer price, the market clearly thinks a better offer is a distinct possibility.”
AJ Bell financial analyst Danni Hewson said: “The battle for Morrisons might be in its final round, but neither competitor is out for the count yet.”
She added: “The supermarket presents huge opportunities, particularly when it comes to the complimentary portfolio of petrol forecourts.”