CD&R Seeks Equity Partners for Improved Morrison Offer

(Bloomberg) -- Clayton Dubilier & Rice is speaking with potential equity partners as it prepares an improved offer for British grocery chain Wm Morrison Supermarkets Plc, people with knowledge of the matter said.

The buyout firm is in discussions to team up with some of the investors in its funds -- known as limited partners -- on a fresh bid, the people said. CD&R is considering making an increased offer as soon as the coming days, according to the people, who asked not to be identified because the information is private.

Private equity firms often partner with a large pension manager or sovereign wealth fund on major acquisitions to reduce the amount of capital they have to commit themselves. Under British takeover rules, CD&R has until Aug. 9 to decide whether to make a rival bid for the supermarket chain.

Shares in Morrison were up as much as 0.83% in early trading in London on Tuesday, giving it a market value of 6.4 billion pounds ($8.8 billion).

Morrison has already accepted a 6.3 billion-pound proposal from Fortress Investment Group. Earlier this month, investment firm Apollo Global Management Inc. said it was in talks to join the Fortress bid and wouldn’t make a separate offer for Britain’s fourth-largest grocer.

The offer from Fortress came with a series of pledges on maintaining salaries, honoring supplier relationships and holding onto Morrison’s extensive property portfolio. In addition to preparing an increased bid, CD&R is considering what additional commitments it can make to win over Morrison’s board, Bloomberg News reported earlier this month.

BNP Paribas SA has joined Goldman Sachs Group Inc. and JPMorgan Chase & Co. as an adviser to CD&R and will help provide financing for the potential acquisition, the people said. Deliberations are ongoing, and there’s no certainty CD&R will submit a new proposal, according to the people.

Representatives for CD&R, Morrison and BNP Paribas declined to comment.

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