Grocer Morrison to Be Auctioned Off to Private Equity Bidders
Fortress Investment Group and Clayton Dubilier & Rice LLC are to face off in an auction for Wm Morrison Supermarkets Plc that will likely determine who wins the battle for Britain’s fourth-largest grocer.
The procedure kicks off on Oct 2. It will last one day and consist of a maximum of five rounds, according to a statement from the U.K. Takeover Panel on Wednesday. All parties have agreed to the terms, which state all increased offers must be at a fixed price in pounds.
The auction will determine the final price each company is willing to pay for Morrison. The grocer will then make a recommendation to shareholders on which offer to back. Shareholders will have the final say when they vote on Oct. 19. It will be Britain’s biggest take-private deal in at least a decade, according to data compiled by Bloomberg.
News of the auction is the latest twist in the heated battle for Morrison, which is attracting buyout interest because of the large amounts of cash it generates, as well as its real estate portfolio. The grocer owns most of its 500 stores, as well as 14 factories where it makes much of the food it sells.
The fight to control Morrison has been under way since June, when news emerged that U.S. private equity group CD&R had made an approach that had been rejected by the supermarket operator. Since then the board first recommended a 6.7 billion-pound ($9 billion) offer from rival private equity group Fortress, before switching to back a 7 billion-pound proposal from CD&R.
The offer from CD&R will be funded with more than 3.4 billion pounds of equity from funds managed by the private equity firm. Debt of about 6.6 billion pounds will be provided by bridge loans and revolving credit facilities by Goldman Sachs, Bank of America, Mizuho and BNP Paribas.
Fortress is leading a consortium that also includes America’s billionaire Koch family, the Canada Pension Plan Investment Board and Singapore sovereign wealth fund GIC.
Both parties have pledged to maintain Morrison’s policy on pay and pensions and support its long-term relationships with British farmers. CD&R has also since pledged to provide “additional security” to support the grocer’s pension schemes.
©2021 Bloomberg L.P.