Bidding war for Morrisons heats up with £7bn offer from US equity group

In the latest twist in supermarket giant’s dramatic takeover battle, Morrisons on Friday (20) has accepted an improved £7 billion takeover bid from US private equity group Clayton, Dubilier & Rice (CD&R), as per latest reports.

Morrisons’ board is said to have accepted the offer and said shareholders should vote in favour of the takeover at a meeting due in early October, stated reports, suggesting the company has withdrawn its recommendation for investors to accept a previous £6.7bn takeover deal from a consortium led by rival private equity firm Fortress. 

The consortium is now “considering its options” as to whether it returns with another bid, reports said.

Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said that although the new offer has the backing of Morrisons’ management, “this might not be the end of the story”.

Rival bidder Fortress has urged investors to “hold fire on accepting the deal” and are expected to make a further statement in due course, BBC quoted Hyett in a report.

The new offer comes a week after CD&R was given an extended deadline until Aug 20 afternoon by British regulators to table a bid or walk away. CD&R had originally been turned down by the Morrisons board, saying a potential £5.5bn pound bid significantly undervalued Morrisons and its future prospects.

The news of the new offer and the possibility of a continuation in the bidding war buoyed Morrisons’ share price on Friday (20).

Originally a Bradford-based retailer, Morrisons is currently owned by a raft of institutional shareholders, including Silchester International, Columbia, Blackrock and Schroders.

It has almost 500 shops and more than 110,000 staff.

CD&R is a 43-year-old company and is one of the most firmly established investors in the sector. It has been advised by former Tesco chief, Sir Terry Leahy, over the past 10 years, who is said to be heavily involved in its deal with Morrisons. He had also helped CD&R secure a 60 per cent stake in US discount retail group B&M in 2013, as per reports.