Morrisons suitor CD&R poised to kick off bidding war

Private equity giant Clayton, Dubilier & Rice (CD&R) is set to kick off a bidding war for the supermarket giant by submitting a counter offer, which could be lodged in the coming days.

CD&R, which is advised by former Tesco boss Sir Terry Leahy, has been lining up equity and debt financing for the offer, according to The Sunday Times.

If it were to win the auction, CD&R plans to rapidly roll out Morrisons convenience stores across its Motor Fuel Group petrol forecourts business, which operates close to 1,000 sites across the UK. 

CD&R is also understood to be eyeing new ways to use excess space in some of Morrisons’ larger supermarkets.   

It comes after Morrisons’ largest shareholder Silchester dealt a hammer blow to the Morrisons board by revealing it would not be backing the £3.6bn offer from Fortress.

Silchester, which owns a 15.1% stake in the Bradford-based grocer, 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 252p-per-share offer from Fortress undervalues the supermarket chain. Its share price closed last week at 264p.

CD&R has until August 9 to table a formal offer.

Fortress has already moved to beef up its firepower in the event of a bidding war.

Last week, Singapore’s sovereign wealth fund GIC joined its consortium, which is already backed by Canadian pension fund CPPIB and a division of the Koch family empire.

Fortress, which already owns Majestic Wine in the UK, has also held talks with private equity firm Apollo about joining forces on the deal.

The Morrisons board has recommended Fortress’ offer to shareholders, who are set to vote on the bid later this month.

But CD&R hopes to gain greater support having already enjoyed a successful stint as custodian of B&M before floating the business back in 2014.

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