CD & R Wins $ 10 Billion Auction at British Supermarket Morrisons


London – Clayton, Dubilier & Rice (CD & R) won the Morrisons auction with a £ 7 billion bid, paving the way for US private equity firms to dominate the UK’s fourth-largest supermarket group.

The Morrisons board recommended a bid of 287 pence per share of CD & R on Saturday. Hours after bidding, it defeated a consortium led by SoftBank’s Fortress Investment Group.

The CD & R victory marks the return of the victory to the UK grocery sector for Terry Leahy, senior executive officer of CD & R and former CEO of Tesco, the UK’s largest supermarket chain.

The board said the private equity group confirmed that its previously stated intentions for Morrisons remained unchanged, with shareholders voting in favor of an offer of 287 pence per share at a meeting scheduled for October 19. Recommended.

“Today’s final offer from CD & R represents great value for shareholders while protecting Morrisons’ basic character for all stakeholders,” Morrisons Chairman Andrew Higginson said in a statement. ..

If shareholders approve the offer, CD & R may complete the acquisition by the end of the month, making Morrisons the second UK supermarket chain in a year to be acquired by private equity after the acquisition of No. Three players Asda completed in February.

Eggs and butter

CD & R has promised to maintain its Morrisons headquarters in Bradford, Northern England, and its existing management team, led by CEO David Potts.

It also states that it will implement the existing strategies of the supermarket chain, not sell real estate in freehold stores, and maintain staff payment rates.

However, these commitments are not legally binding.

Morrisons started in 1899 as an egg and butter merchant. Listed in 1967, it is the fourth largest grocery store in the UK after Tesco, Sainsbury and Asda.

The takeover battle, which has been going on since May, is the hottest of many UK companies’ bids this year, reflecting private equity motivation for cash-generating UK assets.

The winning bid for the CD & R was slightly above the 285 pence stock offer already recommended in August.

The final offer represents a 61% premium on Morrisons’ share price before public interest in the acquisition emerged in mid-June. Some analysts say the winner may have to sell assets such as factories, warehouses, and stores in order to make a decent profit.

CD & R may open a Morrisons convenience store on the site by combining the 918 Motor Fuel Group (MFG) fuel forecoat with Morrisons-owned 339, but may face scrutiny from competition regulators. I have.

Leahy, who was Tesco’s CEO for 14 years until 2011, is now reunited with two of Tesco’s closest lieutenants, Potts and Higginson of Morrisons.

Potts, who joined Tesco as a 16-year-old shelf stacker, earns over £ 10m by selling Morrisons shares to CD & R. Chief Operating Officer Trevor Strain puts about £ 4 million in his pocket.

The fortress is left to lick its wounds and drown out the cost of the story. According to a document released in July, the fortress was expected to bear bank and advisory fees and £ 263.5 million.

The fortress stated in a statement: “The UK remains a very attractive investment environment in many ways and continues to look for opportunities to help strong management grow their businesses and create long-term value.”

Sainsbury’s has been the focus of attention in recent months as another possible target for private equity and investment firms.

James Davy and Sarah Young

Reuters

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