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Clayton, Dubilier & Rice, a US-based private equity group, has bid to buy the Wm Morrison supermarket chain in a deal that would take it to Britain’s fourth-largest private outlet, according to two people with direct knowledge of the subject.
One of those people said the Morrisons board, which has £ 4.3 million and £ 3.2 million in net debt in the market, met on Saturday to look into the merits of the approach. The company refused.
CD&R is working with Goldman Sachs on its offering, another person added. A statement clarifying his intentions could be released on Saturday.
The exact value of the offer could not be known immediately, but Sky News reported that the CD&R company, which would have a value for Morrisons worth around £ 5.5 billion, was growing. CD&R and Morrisons refused.
The outlook highlights the hunger for private assets in the UK and especially in supermarket chains.
Purchasing groups have announced bids for at least 12 UK listed companies since the start of this year as Brexit and the pandemic weigh on stock prices. This is the fastest pace of private attempts in more than two decades, as shown by Refinitiv data.
CD&R’s approach to competition regulators this week cleared a € 6.8 billion deal for EG Group petrol station owners, brothers Mohsin and Zuber Issa, and private equity firm TDR Capital to buy Asda’s third-largest supermarket chain in the UK.
CD&R is one of its advisers to former Tesco CEO Sir Terry Leahy. Andrew Higginson, the current Morrisons chair, worked with Leahy at Tesco for many years. He is also an investor in Motor Fuel Group, a rival to the EG Group’s gas station.
Morrisons ’management team, led by CEO Dave Potts, has been trying to turn the business’s performance around since 2015 by creating partnerships with Amazon and Deliveroo.
However, the market has not rewarded them. Shares are lower than when Potts took over and have fallen 6.3 per cent in the past year, compared to an 11.5 per cent rise in the FTSE 100 index of the UK’s best companies until earlier this year. fell.
Earlier this month, 70% of shareholders discarded its payment arrangements.
By the end of January, the company had reported an 8% increase in sales at the same store, although total revenue grew by only 0.4 per cent to £ 17.5 billion due to significantly lower fuel sales.
Covid-related costs generated profits, and net income rose 0.5% to 96 million euros. According to Capital IQ, it has 118,000 employees.
Analysts have long thought that the group could fall for a bidder attracted by the creation of money and, like the third-ranked Asda, a large proportion of free stores.
CD&R has been among the most active private equity firms in the UK market this year, having agreed a £ 2.8bn deal to buy the UDG-listed healthcare services group in the UK and £ 308m for the Wolseley plumbing business.
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