Fortress increases bid for Morrisons to £6.7bn

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The consortium led by US private equity firm Fortress has increased its offer for Morrisons in a bid to fend off rival suitors.

Fortress said it had agreed terms on an improved bid which values the grocer at £6.7bn – a 7% increase on its previous offer of £6.3bn.

Fortress has now offered to pay 270p per Morrisons share, as well as a 2p per share special dividend.

The grocer’s share price jumped from 269p to 278p after details of the improved bid were revealed to the market.

Morrisons’ board said the terms of the increased offer were “fair and reasonable” and has again recommended the offer to shareholders.

The statement added: “The Morrisons directors consider the increased Fortress offer to be in the best interests of the Morrisons shareholders taken as a whole.

“The Morrisons directors have also taken into account the interests of the Morrisons business, its management and employees, the Morrisons pension schemes and other stakeholders in Morrisons.”

Fortress, which has teamed up with Singapore’s sovereign wealth fund GIC, Canadian pension fund CPPIB and a division of the Koch family empire on the Morrisons deal, hopes the increased offer will placate investors and fight off interest from other potential bidders.

Morrisons’ largest shareholder, Silchester, said last month it would not be backing Fortress’ initial £6.3bn offer and hit out at the retailer’s board for not allowing more time for competing offers to emerge.

Two of Morrisons’ other top investors, M&G and JO Hambro, also said the offer undervalued the supermarket chain.

Private equity giant Clayton, Dubilier & Rice (CD&R), which is advised by former Tesco boss Sir Terry Leahy, has been lining up equity and debt financing in preparation for a counter bid.

But CD&R only has until 5pm on Monday August 9 to make a firm offer under Takeover Code rules.