Morrisons accepts US private equity group CD&R’s improved £7B takeover offer

20 Aug 2021 --- Morrisons has accepted an improved takeover bid from US private equity group Clayton, Dubilier & Rice (CD&R).

The CD&R offer values the entire issued and to be issued share capital of the UK supermarket chain at approximately £7.0 billion (US$9.5 billion) on a fully diluted basis and implies an enterprise value of £9.7 billion (US$13.2 billion). 

FoodIngredientsFirst reached out to the company for further details on the new development.

Previously, US-based Fortress Investment Group escalated its offer for Morrisons by £400 million (US$554.5 million), to £6.7 billion (US$9.3 billion), in heightened efforts to sway reluctant shareholders.

Morrisons’ shares opened up on Friday, signalling that investors anticipated another bid.

Concluding the bidding war
The retailer, which operates almost 500 stores and employs more than 110,000 staff, has been involved in the bidding war for weeks.

Speculation of a bidding war first started brewing when Apollo Globe entered in July as the third firm to show interest in Morrisons.

The supermarket turned down an offer worth £5.5 billion (US$7.5 billion) from CD&R in the same month, commenting that it significantly “undervalued the business.”

However, the grocery’s board unanimously accepted the new offer, which represents a 60 percent premium to Morrisons’ share price prior to takeover interest being signaled in June.

The CD&R offer value payable by Bidco to Morrisons Shareholders will be financed from a combination of equity capital to be invested by CD&R Fund XI, Ares European Direct Lending and Alternative Credit Funds and West Street Strategic Solutions.

The offer also encompasses financing provided by Goldman Sachs Bank USA, BNP Paribas, Bank of America, London Branch and Mizuho Bank.

By Benjamin Ferrer