CD&R’s Bid Deadline for U.K. Grocer Extended Amid Heated Battle

(Bloomberg) -- The battle for Wm Morrison Supermarkets Plc looks set to drag on for at least a few more weeks after Clayton Dubilier & Rice LLC secured an extended deadline to bid for Britain’s fourth-largest grocer.

Britain’s Takeover Panel confirmed a new deadline of Aug. 20 for the buyout firm to “put up or shut up” in a statement on Monday. CD&R asked to push back the date from Aug. 9 after rival Fortress Investment Group pre-emptively raised its offer for Morrison to 6.7 billion pounds ($9.3 billion) on Friday.

CD&R’s last bid was rejected by Morrison’s management in June and it may face an uphill battle against Fortress, which pledged not to carry out material sales and leasebacks of the grocer’s real estate portfolio.

If CD&R doesn’t come back with a higher bid, shareholders will vote on Fortress’s offer on Aug. 27. Morrison shares rose as much as 1.1% in London on Monday and remain above Fortress’s improved price, indicating the market still expects CD&R to come back with a better offer.

CD&R Gains More Time in Battle to Win U.K. Grocer Morrison

The events over the last few days mark the latest twists in an increasingly heated battle for Morrison.

Buyout firms are vying for the British grocer in part because of its real estate portfolio -- it owns about 90% of its almost 500 stores. The business, led by Chief Executive Officer David Potts, also generates large amounts of cash and has low underlying debt and a pension surplus. The fortunes of leading supermarkets have also improved after lockdowns triggered a surge in grocery spending.

Bumping Bid

On Friday, Fortress, already sitting on a recommended bid of 254 pence a share, decided to increase its offer to 270 pence a share plus a 2 pence dividend, even though CD&R had yet to show its hand. It made the move not only to increase pressure on CD&R, but also because some shareholders were unhappy with Fortress’s original bid.

Silchester International, M&G Plc, and J O Hambro Capital Management, investors who together control almost 20% of Morrison, previously said Fortress’s earlier proposal didn’t reflect the true value of the company.

The Fortress bidding group includes the billionaire Koch family, the Canada Pension Plan Investment Board and Singapore sovereign wealth fund GIC. Apollo Global Management Inc., which came close to taking majority control of British grocer Asda, has said it’s considering joining the Fortress consortium.

The CD&R bid is being led by Terry Leahy, a former CEO of Tesco Plc, Britain’s largest grocer. He has a long history with most of the Morrison management team, including Potts and chairman Andy Higginson, who spent much of their careers at Tesco.

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