Morrisons agrees £6.3bn sale to Majestic Wine owner

The £6.3bn cash offer from Fortress, which also owns Majestic Wine, trumps an earlier £5.5bn for Morrisons from private equity group CD&R which was rejected.

The sale comes amid concern about private ownership of big grocery retailers in the wake of their crucial role during the Covid crisis, food security worries, their importance as employers and fears of asset stripping.

However Morrisons said: “Morrisons and Fortress place very significant emphasis on the wider responsibilities of ownership of Morrisons.  

“These responsibilities include recognising the legacy of Sir Ken Morrison, Morrisons’ history and culture, and the important role that Morrisons plays for all stakeholders, including colleagues, customers, members of the Morrisons Pension Schemes, local communities, partner suppliers, British farming and the wider British public.”

Fortress was said to be a long-term investor that supported Morrisons’ strategy and management, 

Fortress has “fully safeguarded” existing employment and pension rights, including the new landmark pay £10 per hour pay award, and “does not intend to make any change to the benefits provided by the Morrisons Pension Schemes”.

The investor also “fully supports the relationships that Morrisons has fostered with its small suppliers and farmers” and does not envisage any material changes.

Similarly, the new owner “does not anticipate engaging in any material store sale and leaseback transactions”. 

The precedent of Majestic was cited, in the case of which there has been no sale of freehold or long-leasehold properties since it was acquired by Fortress in 2019, and previously planned job cuts were reversed after Foretress took over the retailer.

The transaction will be made through acquisition vehicle Oppidum Bidco Limited and will be funded alongside Fortress by Canada Pension Plan Investment Board (CPP) and Koch Real Estate Investments (KREI). The deal is expected to become effective in the fourth quarter of the year.

Morrisons chair Andy Higginson said: “The Morrisons directors believe that the offer represents a fair and recommendable price for shareholders which recognises Morrisons’ future prospects.

“Morrisons is an outstanding business and our performance through the pandemic has further improved our standing and enabled us to enter the discussions with Fortress from a hard-won position of strength.  

“We have looked very carefully at Fortress’ approach, their plans for the business and their overall suitability as an owner of a unique British food-maker and shopkeeper with over 110,000 colleagues and an important role in British food production and farming.

“It’s clear to us that Fortress has a full understanding and appreciation of the fundamental character of Morrisons. This, together with the very clear intentions they have set out today, has given the Morrisons Directors confidence that Fortress will support and accelerate our plans to develop and strengthen Morrisons further.

“Fortress, CPP Investments and KREI all have strong track records and a long-term approach to investing. They are backing our strategy, our management and our people. 

“Morrisons has a rich history and a special culture and I am convinced that with the long term support of Fortress, the business will continue to prosper in the future.”

Fortress managing partner Joshua A Pack said: “We believe in making long-term investments focused on providing strong management teams with the necessary flexibility and support to execute their strategy in a sustainable and value enhancing manner. 

“We fully recognise Morrisons’ rich history and the very important role Morrisons plays for colleagues, customers, members of the Morrisons Pension Schemes, local communities, partner suppliers and farmers. 

“We are committed to being good stewards of Morrisons to best serve its stakeholder groups, and the wider British public, for the long term.”