Morrisons suitor hikes offer price to £6.7bn
the Fortress-led consortium raised its offer price for Morrisons yesterday to £6.7bn, in a pre-emptive strike to ward off a rival bid.
the private equity group said it has received the backing of the supermarket group’s board for an offer of 270p per share plus a 2p special dividend.
the bid is a 7pc improvement on its existing offer of 254p, or £6.4bn, and 52pc higher than the share price in June, before takeover interest became public.
the move piled the pressure on rival bidder Clayton Dubilier & Rice (CD&R), which is being advised by former tesco boss sir terry Leahy.
the Morrisons board had rejected CD&R’s unsolicited 230p-a-share offer in June.
CD&R did have until 5pm on Monday to come forward with an improved offer, or walk away but Morrisons has asked the takeover Panel to extend this deadline.
the supermarket group has also postponed a shareholder vote on the Fortress bid by 11 days to August 27.
shares in Morrisons jumped 2.5pc, or 6.8p, to 278.8p yesterday, showing investors believe the price will rise higher still.
A CD&R insider confirmed that the private equity group was still intending to bid before the deadline.
Fortress’s offer followed a shock intervention by Morrisons’ largest shareholder silchester, which said it was ‘not inclined’ to support their 254p offer, and it was deliberately pitched above the 270p level that top ten shareholder JO hambro had said ‘merits engagement’.
Analysts have suggested that offers between 270p and 280p are competitive, although one has suggested the real price is 314p per share, or £7.7bn. the Fortress consortium, which includes the billionaire Koch family and the singaporean sovereign wealth fund, said it ‘noted the speculation regarding a possible counter-offer by CD&R’. It did not say its 272p bid was final, leaving them room to raise it if needed.
the prospect of Morrisons losing its independence has sparked protest from across the City and Westminster, with critics fearing the supermarket will be loaded up with debt and broken up.
the business is also a prime target for sale and leasebacks, as it owns more than 80pc of the freeholds on its property. Analysts have warned that as the price rises will pump up the pressure to sell its food factories, warehouses, supermarkets and petrol stations. Morrisons also owns fisheries and food-processing plants, and is also British farming’s single biggest customer.
Last week watchdog, the Competition and Markets Authority, cleared the path for Fortress’s takeover, confirming its ownership of wine chain Majestic did not raise competition concerns.
If CD&R were to triumph, the watchdog could ask it to sell some of Morrisons 330 petrol stations, as it already owns 900 forecourts through Motor Fuel Group. the Issa brothers were forced to sell 27 petrol stations when they bought Asda, as they already owned forecourt giant eG Group.