Battle for Morrisons to be decided by auction

Shutterstock.com

It looks like the long-running takeover battle between two American investors for British supermarket group Morrisons will finally be decided through a seldom-used auction process.

 

Auction

On Wednesday, Morrisons said it was in talks with Clayton, Dubilier & Rice (CD&R), Fortress Investment Group and the UK's takeover regulator about setting up an auction to settle Morrisons' future.

 

Last month, the British retailer agreed to a seven billion pounds (eight billion euros) bid from CD&R, dropping its former recommendation of a lower offer from a Fortress-led consortium. But that did not mean that Fortress was really out of the game...

 

Morrisons said neither bidder had made its bid final. Therefore, the company was in talks to both parties and the takeover regulator about "an orderly framework to resolve this competitive situation". In practice, this would entail an auction, Reuters reported.

 

Taking responsibility

If an auction were to occur, it would most likely take place before the week of 18 October, when a meeting of Morrisons' shareholders is scheduled. After the auction, shareholders would be able to decide on a bid by Fortress or CD&R, depending on which bid the Morrisons board recommends.

 

In this regard, the supermarket chain reiterated that it would look beyond the financial terms of a bid and "attaches great importance to the wider responsibilities of ownership", including the interests of employees, customers, pension trustees and suppliers.

 

Significant drop in profits

Apart from all the acquisition fuss, Morrisons also published its half-year results yesterday. The retailer warned of industry-wide price increases due to higher raw material and transport prices and the acute shortage of lorry drivers.

 

The total turnover of the British group grew by 4 % to 9.1 billion pounds (almost 11 billion euros), reports Retail Gazette. In addition to a sharp increase in online sales, the wholesale activities also performed well. However, profit before tax fell from 145 million pounds to 82 million pounds (100 million euros), partly due to additional costs linked to the pandemic. In addition, ongoing Covid measures weighed on revenues from non-core activities, such as the retailer's cafes and fuel sales.