Morrisons backs £7bn takeover offer from ex-Tesco boss Leahy and CD&R

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Morrisons has recommended a £7bn offer from private equity giant Clayton, Dubilier & Rice (CD&R), which has trumped a rival bid from Fortress.

The grocer said on Thursday evening that CD&R, which is advised by former Tesco chief executive Sir Terry Leahy, had tabled an offer valuing it at 285p per share.

Morrisons’ board recommended the improved offer, switching their recommendation away from Fortress, which hoped to strike a deal valuing the supermarket group at £6.7bn.

Morrisons had already turned down an offer of £5.5bn from CD&R, which it said significantly undervalued the business.

Morrisons chair Andrew Higginson said the increased offer from CD&R “represents good value for shareholders while at the same time protecting the fundamental character of Morrisons for all stakeholders”.

Leahy said: “The grocery sector in the UK is undergoing great change and we believe Morrisons is well placed, with CD&R’s support, to succeed in this environment.

“CD&R values Morrisons’ distinctive business model and is committed to supporting it, including the successful ESG and broader stakeholder engagement strategies of the company that are essential to its continued success.”

The deal is expected to become effective in October.

Fortress said it is considering its options. Overnight the private equity firm urged Morrisons shareholders to “take no action” to the improved CD&R bid and said a further announcement would be made in due course.