The battle to take over Morrisons will be decided at a one-day auction on Saturday, the supermarket said, as two US private equity firms vie for the UK’s fourth-largest grocery chain.
Fortress and Clayton, Dubilier & Rice (CD&R) are due to submit formal bids, with the auction process taking place on Saturday for a maximum of five rounds.
A result will be announced by Monday morning, although the process can also be abandoned if either party says it will not increase its current offers. If neither company makes an increased bid, CD & R’s latest bid will win. CD&R’s offering valued Morrisons at £ 7 billion, or £ 9.7 billion, including debt.
This will end a takeover saga that has dragged on since CD&R, advised by former Tesco chief executive Sir Terry Leahy, made an initial approach to the Bradford grocer in June.
After the June offer, Softbank-backed rival Fortress made a £ 6.5 billion offer in July. However, shareholders felt it was too low and Fortress, which owns Majestic Wines, returned a month later with an increased offer of £ 6.7bn in August, which the board accepted.
Later in the month, CD&R returned with its £ 7bn offer, prompting the board to withdraw support for the Fortress offer and back the higher offer, after several Leading investors have expressed concerns about the preliminary offers.
The Morrisons auction comes amid a flurry of bids for UK companies from private investors, especially from the US, as UK companies could be undervalued relative to their international peers. Targets range from supermarket rival Asda to a range of aerospace and defense manufacturers, including Ultra Electronics and Meggitt.
The takeovers have raised concerns over the sale of significant UK assets. Morrisons played an important role in feeding the country during the coronavirus pandemic, relying on assets such as its own food manufacturing facilities, farms and even a fishing fleet.
William Woods, analyst at AllianceBernstein, an investment bank, has calculated that the new owners of Morrisons may have to sell assets worth more than £ 1.5bn in order to achieve the returns expected by private investors .
Both potential buyers 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 the company’s freehold properties.
Supermarkets typically rent out properties, while Morrisons continues to own around 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.
The Takeover Panel stated: “Since none of the bidders have declared their bid final, so either bid may be increased or otherwise revised, a competitive situation continues to deteriorate. ‘to exist. “
Both parties have agreed that all offers will be at a fixed cash price and may not include stakes in other companies or dividends to shareholders. If both parties still bid before the final round, Fortress must bid per share with an even number of pence and CD&R with an odd number, to avoid the bids being the same.
The results will be published Monday morning at the latest. However, if either party makes a “no increase” declaration by the end of the week, the auction will be canceled.