Morrisons braces for bidding war after accepting £6.3bn takeover

The UK supermarket’s board accepted a 252p-a-share offer from private equity firm Fortress yesterday, having previously turned down a lesser offer from CD&R which valued the firm at £5.5bn. 

The total value of the deal is £9.5bn, with the group valuing Morrisons’ equity at £6.3bn and including £3.2bn of net debt under the takeover.

However this morning, private equity firm Apollo said that it was “in the preliminary stages of evaluating a possible offer for Morrisons” following speculation of its interest in The Sunday Times. 

Mark Kelly, a managing director at investment manager Cowen, told the Times: “It is likely that Morrisons’ board saw there was a lack of tension in the absence of competition — and therefore once one [private equity] bidder tabled an offer…it is an appropriate tactic to accept this, make it public and hope that a competitive auction then ensues.”

Fortress has committed to keeping Morrisons’ Bradford HQ open, and said it wouldn’t look to materially strip assets from its freehold store portfolio. 

Union Usdaw ’seeking urgent meetings’

Wholesale partner McColl’s also issued a statement to the City this morning, which said its existing contract with the supermarket giant would not be affected by a change in ownership. 

“Our focus remains firmly on maximising efficiency in its wholesale supply arrangements and the successful rollout of Morrisons Daily conversions across the estate,” it said. 

“McColl’s looks forward to continuing to build on the strong relationship developed with Morrisons over the years to serve our local neighbourhood communities with a high quality convenience offer.”

Following the events of the weekend, shopworkers’ union Usdaw has said it is seeking urgent meetings with representatives of both Morrisons and Fortress. 

Usdaw national officer Joanne McGuinness said: “We are aware that Morrisons has accepted and is recommending a buyout deal from the global investment manager Fortress and note the assurances for staff. We are now seeking urgent meetings with Morrisons current management and the prospective new owners to ensure that our members’ interests and the long term future of the business are protected throughout this process. In the meantime we are providing our members with the support and advice they need through this period of uncertainty.”

Labour’s shadow minister for business Seema Malhotra has also raised concerns over a private equity takeover of Morrisons: “Ministers must work with Morrisons and the consortium to ensure that crucial commitments to protect the workforce and the pension scheme are legally binding and met.”