Morrisons’ largest shareholder hits out at Fortress takeover bid

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Morrisons’ largest shareholder Silchester International has refused to give its backing to a £6.3bn takeover by US private equity firm Fortress.

Silchester, which owns 15.1% of the supermarket giant, said it ”is not inclined to support the existing Fortress offer at the upcoming court and shareholder meeting. Silchester considers schemes of arrangement, with a 75 per cent hurdle for shareholder acceptance and squeeze out, to be disadvantageous to public shareholders generally.

“In this particular case, the scheme of arrangement has enabled the adoption of a short timetable, giving insufficient opportunity for competing bids to emerge. Silchester encourages Morrison’s board to allow more time to respond to other parties who might offer better value to Morrison’s public shareholders.”

Silchester also highlighted the benefits of remaining a listed business, pointing to the grocer’s sprawling freehold estate and said the Covid-19 pandemic had shown how cash generative supermarkets are and “able to support an attractive dividend”.

Morrisons shareholders are due to vote on the Fortress offer on August 16.

The intervention by Morrison’s largest shareholder casts doubt over the viability of the £6.3bn recommended deal, as Fortress requires the backing of 75% of investors to get its bid over the line.

While no other major shareholder has gone quite so far as Silchester, another top 10 investor Legal & General has been critical of the offer, warning the board not to sell the grocer for the “wrong reasons”.

Rival private equity bidder CD&R still has until August 9 to submit a formal bid for the grocer, which would reset the process.