By Scott Wright
THE future ownership of the UK’s fourth-largest grocer will be decided by an auction this coming Saturday.
WM Morrison has been at the centre of a takeover tussle between two US private-equity players since June, when a first approach to the Bradford-based chain was made by Clayton, Dubilier & Rice (CD&R).
That initial approach was rebuffed, and in the period since the Morrisons board has twice reached agreement on offers from a consortium led by Fortress Investment Group. Morrisons then agreed to a further offer from CD&R on August 19, as the price of a potential deal steadily escalated.
The most recent offer from CD&R, which valued the grocer at £7 billion or 285p per share, was due to go before shareholders for approval on October 19. However the door was still open for Fortress, which is backed by SoftBank of Japan, to come out with a higher offer.
Yesterday, the Takeover Panel announced that on the basis that neither side had declared its offer final, and that either offer may be increased or revised, a competitive situation continues to exist.
To resolve the situation, it has established an auction procedure following a request by both parties.
The auction, which takes place on October 2, will include a maximum of five rounds. In the first round, either party can make an increased bid. If that does not produce a winner, which it will if no increased bid is made, there will be up to three further rounds, in which an offeror can only make a bid if the other party lodged an increased bid in the immediately preceding round. If the auction is not resolved after four rounds, it will go to a fifth and final round in which both parties can submit a higher bid.
The result of the auction will be published by Monday morning at the latest.
The battle for Morrisons, which has nearly 500 stores, comes amid significant interest in the UK grocery sector from private equity players.
Concerns have been expressed in some quarters that a private-equity owner would look to sell off Morrisons’ vast freehold estate, while the Labour Party has previously expressed fears that it could put jobs at and pensions at risk.
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