Morrisons buyout bidding battle ends in £ 7bn offer from private equity giant

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Morrisons shareholders to vote on final offer later this month (PA) (PA Wire)

The battle to buy a supermarket Morrisons ended with private equity giant Clayton, Dubilier & Rice (CD&R) outbid Fortress in a dramatic auction process.

The stock market takeover panel said Fortress was offering 286 pence per Morrisons common share, while CD&R was offering 287 pence – meaning its bid stands at almost £ 7 billion.

The supermarket’s final offer will now be voted on by shareholders on October 19.

The takeover saga has continued since CD&R first approached the Bradford grocer in June, leading to speculation that the industry was ripe for private equity takeovers.

Morrisons boss David Potts and the rest of the supermarket board have approved the CD&R offer (Morrisons / PA) (PA Media)

Morrisons boss David Potts and the rest of the supermarket board have approved the CD&R offer (Morrisons / PA) (PA Media)

Following the initial offer, Fortress, backed by Softbank, made an offer of £ 6.3 billion in July.

But shareholders felt it was too low and Fortress, which owns Majestic Wines, returned with a raised offer of £ 6.7bn in August, which the board accepted.

Later in the month, CD&R, which includes former Tesco boss Sir Terry leahy as an advisor, came back with an increased supply of £ 7 billion.

This led to the board withdrawing its support for the Fortress bid and supporting the higher bid.

But because neither party made a formal offer, the Takeover Panel launched an auction process.

Morrisons owns around 90% of his estate (Ian West / PA) (PA Wire)

Morrisons owns around 90% of his estate (Ian West / PA) (PA Wire)

Both sides agreed beforehand that all offers would be at a fixed cash price and could not include stakes in other companies or dividends to shareholders.

Both sides were keen to stress that they wanted to defend the supermarket’s values ​​and tried to push back on suggestions that they would start selling large swathes of the company’s freehold properties.

Supermarkets typically rent out properties, while Morrisons continues to own approximately 90% of its estate.

There are also concerns that any new owner will reduce the supermarket’s tax bill, with offshore shell companies being formed before the takeover.

Morrisons pension plan trustees will need to be consulted, although they said earlier this month that an agreement had been reached with CD&R.

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