Morrisons Supermarket agrees £6.3bn takeover

Supermarket chain Morrisons has accepted a £6.3bn ($8.7bn) takeover bid by a US investment group led by the owner of Majestic Wine.

Last month, the supermarket group turned down an offer worth £5.5bn from a different firm, saying it had significantly undervalued the business.

Morrisons chairman, Andrew Higginson, said the new offer was fair, and the chain would “continue to prosper”.

The firm has nearly 500 shops and more than 110,000 staff in the UK.

The takeover – led by US private equity group Fortress Investment Group – is subject to shareholder approval but the supermarket group’s directors are recommending it is unanimously voted for.

Under the deal’s terms deal shareholders will get 254p per share – which Morrisons said was a 42% premium on its share price before the offer period – brought about with the disclosure of the rejected offer from Clayton Dublier & Rice (CD&R).

Mr Higginson said the supermarket’s “performance through the pandemic” had improved its standing and enabled it to enter discussions with Fortress from “a hard-won position of strength”.

He said it was clear to the supermarket’s directors that Fortress had a “full understanding and appreciation of the fundamental character of Morrisons”.

Joshua A Pack, managing partner at Fortress, said the group was committed to being “good stewards of Morrisons”.

Fortress’s bid is backed with funding by the Canada Pension Plan and Koch Real Estate Investments – part of Koch Industries.

Russ Mould, investment director at stock broker AJ Bell, said the American investors may have considered Morrisons – the UK’s fourth largest supermarket group – as being “unloved, under appreciated and therefore under valued” meaning they thought they were getting a bargain.

Mr Mould added that Fortress had been clear in its statement that it did not plan to sell any of its real estate which he thought was aimed at reassuring staff and wider society that this would not be a case of asset stripping by a private equity firm.

Morrisons owns the freehold on about 85% of its properties including its supermarkets.

Labour’s shadow business minister Seema Malhotra said the government must closely scrutinise the takeover bid and called on ministers to work with the consortium to ensure “crucial commitments to protect the workforce and the pension scheme are legally binding, and met”.

The government said it was committed to “ensuring that the UK remains open for business, while protecting the livelihoods of British workers and investment in the UK”.

Workers union Unite said it wanted “unbreakable guarantees” on jobs and conditions or it would not co-operate with any sale.

Unite’s national officer for road transport Adrian Jones, which represents Morrisons’ warehouse and distribution workers, said the company was “unique among UK supermarkets” because it owns its supply chain.