Rivalling private equity firms are reportedly preparing to engage in a bidding war for Morrisons after it accepted £6.3bn takeover offer yesterday (4 July).
The UK supermarket chain’s board of directors accepted a 252p-a-share offer from private equity firm Fortress, rejecting an earlier bid Clayton Dubilier & Rice (CD&R) which valued the company at £5.5bn.
Prior to this purchase, Fortress had invested widely in the European and North American grocery markets, including in Majestic Wine in the UK.
In response to Fortress’ offer, shares in Morrisons jumped 11% at the start of trading in London as investors prepare for a bidding war over the supermarket giant
US private equity group Apollo has confirmed to the City that it is in the early stages of considering a bid.
This further raises the possibility of a three-way battle for Morrisons as it is speculated that CD&R will position a follow-up bid following the supermarket board’s rejection of their previous one.
In a statement, Apollo said: “Apollo Global Management, Inc. (together with its subsidiaries, “Apollo”) notes the recent press speculation in relation to Morrisons and confirms that it is, on behalf of certain investment funds managed by it, in the preliminary stages of evaluating a possible offer for Morrisons.
“No approach has been made to the board of Morrisons. There can be no certainty that any offer will be made, nor as to the terms on which any such offer might be made.”
Following the board’s decision, Morrisons said: “Fortress has observed Morrisons’ strong operational and financial performance, both during and prior to the Covid-19 crisis.
“Fortress has followed Morrisons’ development with strong interest and has dedicated significant resources to developing a thorough understanding of Morrisons’ positioning and long-term potential.”
It added: “Further, Fortress views Morrisons’ vertically integrated model, substantial focus on grocery retail and nimble and entrepreneurial approach to strategic partnerships (including with small suppliers, farmers and local communities) as clear differentiators and an excellent basis for continued, long-term growth.”