CD&R to takeover Morrisons for £7bn
Clayton, Dubilier & Rice (CD&R), a US private equity group has won an auction for UK’s fourth largest British supermarket group, Morrisons with a £7bn ($9.5bn) bid.
Terry Leahy, the former CEO of Tesco, is the senior adviser to CD&R. The takeover has dragged on since June 2021 amid fierce competition from two US-based investment groups.
CD&R’s victorious bid was announced by the Stock Market’s Takeover Panel on Saturday. CD&R offered 287p per Morrisons ordinary share, against a rival bid from Fortress, for 286p per share.
CD&R’s auction offer is slightly higher than the 285p-a-share that was recommended by Morrison’s board in August 2021. In July, Morrisons turned down an offer worth £5.5bn from CD&R, saying it significantly undervalued the business. The board which will meet on Saturday, is now expected to recommend shareholders accept the new offer at a meeting set for 19 October. If the bid is approved by shareholders, CD&R will takeover Morrisons by November.
Morrisons was founded in Bradford in 1899 by William Morrison’s son the late Sir Ken Morrison, who started the business as a butter and egg merchant, and ran the supermarket for 50 years. The group has almost 500 stores and more than 110, 000 staff.
CD&R said it recognised Morrisons “history and culture and considers that this strong heritage is core to Morrisons and its approach to grocery retailing.”
Morrisons chairman Andrew Higginson and CEO Trevor Strain, both previously worked with Sir Terry at Tesco.
With the UK hit hard by pandemic and the value of the pound still below its pre-Brexit value, UK business may appear cheap to non-UK investors.
Sir Terry also advised CD&R on its acquisition of discount retailer B&M which netted the private equity firm an estimated profit of £1bn when it sold on.