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Morrisons UK rejects $ 7.6 billion takeover bid from CD&R By Reuters

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© Reuters. PHOTO FILE: An overview shows the parking lot of a Morrisons supermarket that will be transformed into a center through the coronavirus vaccination center (COVID-19), in Yeovil, UK, on ​​January 9, 2021. REUTERS / Paul Childs

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By James Davey

LONDON (Reuters) – British supermarket group Morrisons has turned down a £ 5.52bn ($ 7.62bn) bid from US private company Clayton, Dubilier & Rice (CD&R), saying it is too low .

Britain’s fourth-largest retailer after Tesco (OTC :), Sainsbury’s and Asda, said it received on Monday the “unwanted, highly conditional and non-binding” offer of 230 pence a share.

The council of Bradford, in the north of England, Morrisons, rejected the proposal Thursday.

“Morrisons’ board evaluated the conditional proposal with its financial advisor, Rothschild & Co, and concluded unanimously that the conditional proposal significantly underestimated Morrisons and its future prospects, ”the group said in a statement Saturday. .

Shares in Morrisons, down 5.5% over the past year, closed Friday at 182 pence, valuing the group at £ 4.33 billion.

Morrisons said the CD&R proposal calls for Morrisons shareholders to also receive a final ordinary dividend of 5.11 pence per share announced on March 11th.

CD&R had announced Saturday before that it was considering a possible cash offer for Morrisons.

In accordance with British rules of conduct CD&R has until July 17 to announce a firm intention to make an offer.

APPETITE FOR SUPERMARKETS

The CD&R approach underscores the growing appetite of private equity for supermarket goods in the UK, attracted by its cash generation and free assets.

In February, Zuber and Mohsin Issa and private company TDR Capital acquired a majority stake in Asda from Walmart (NYSE 🙂 in an agreement valuing the UK supermarket group at £ 6.8 billion.

This deal followed Sainsbury’s failure to take back Asda after a deal was blocked by the UK competition regulator in 2019.

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

A formal offer from CD&R could involve Terry Leahy, the former CEO of Tesco who is CD&R’s senior advisor.

When he was at Tesco, Leahy was the head of Andrew Higginson and David Potts, who are now respectively president and CEO of Morrisons.

Morrisons, unique among British supermarket groups in producing more than half of the fresh food it sells, sells from around 500 shops and has a staff of 118,000, making it one of the largest private sector owners. of the country.

In March, the group reported a halving of annual profit due in large part to costs incurred during the COVID-19 pandemic, but expects a return in the year 2021-22.

Earlier this month, Morrisons was reprimanded by investors for executive pay, with more than 70% of the votes cast at its annual shareholders ’meeting rejecting its pay report.

($ 1 = 0.7242 pounds)

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