British Morrisons Fortress Investment Group agrees to $ 8.7 billion bid by Reuters

By James Davey

LONDON (Reuters) – Morrisons has agreed to a bid from Fortress Investment Group, the fourth largest supermarket operator in the UK, valued at £ 6.3 billion ($ 8.7 billion) and the main competitive bid submitted by a US private equity firm.

Fortress’s offer, backed by the Canadian Pension Plans Investment Committee and Koch Real Estate Investment, exceeds a £ 5.52bn proposal by Clayton, Dubilier & Rice (CD&R), which Morrison rejected on June 19, saying it was too low.

“Morrisons’ executives believe the offer is a fair and recommendable price for shareholders, which recognizes Morrisons ’future opportunities,” said President Andrew Higginson.

“We have looked closely at Fortress’s vision, plans for the business and the ownership of a special British food retailer and shopkeeper with more than 110,000 employees and its important role in UK food production and farming.” .

Fortress is a global investment manager with $ 53 billion in asset management in March.

“We are committed to being good managers at Morrisons in the long term to provide the best service to its stakeholders and the general public in the UK,” said managing partner Joshua A. Pack.

Under the agreement recommended by Morrisons management to shareholders, investors would receive a 254-cent share, 252 cents in cash and a 2-cent dividend.

Morrisons, in Bradford (northern England), began selling eggs and butter in 1899. Now Tesco (OTC 🙂 only sells Sainsbury’s and Asda the market leader every year.

Morrisons owns 85% of its nearly 500 stores and mostly has 19 free manufacturing sites. It is the only one of the British supermarkets to make more than half of the fresh food it sells.

He said the offer represents a 42% premium of 178 cents per share on June 18 – the last working day before the CD & R proposal.

Shares of Morrisons closed 243 pence on Friday, valuing the business at £ 5.8bn.

FIVE PROPOSALS

CD&R did not comment immediately.

Under UK rules, the CD&R has until July 17 to return with a strong offer.

Morrisons has a partnership agreement with Amazon (NASDAQ 🙂 and there has been speculation that it could also arise as a possible bidder.

Morrisons said he received an unsolicited initial proposal on May 4 from the fort with a 220-cent share. The offer was not made public. The fort made four subsequent proposals before its bid reached a value of 254 shares on June 5th.

The fort deal highlights the growing taste for supermarket groups in the UK as they find it attractive for creating their own money and free assets.

In February, Zuber and Mohsin Issa and private equity firm TDR Capital bought a majority stake in Asda from Walmart (NYSE 🙂 in a deal valued at £ 6.8 billion in UK food.

Following that transaction, Sainsbury’s failed to take over Asda after the British competition regulator blocked the deal agreed in 2019.

In April, Czech billionaire Daniel Kretinsky raised his stake in Sainsbury’s to almost 10%, sparking speculation on the offer.

($ 1 = 0.7235 pounds)