US investment fund Fortress is in pole position to acquire British supermarket chain Morrisons. But there are other players on the scene: at least two other parties have already expressed an interest and may be preparing a counter-offer.
“Fair price”
Last Saturday, Morrisons chairman Andrew Higginson said he supported the 6.3 billion pound (7.4 billion euros) bid from the Fortress-led consortium. “The Morrisons directors believe that the offer represents a fair and recommendable price for shareholders which recognises Morrisons’ future prospects,” he said.
It is the second bid in a short time for the British retailer. Last month, Morrisons rejected an initial bid from Clayton Dubilier & Rice (CD&R) for being largely inadequate. The investor wanted to put 5.5 billion pounds (6.4 billion euros) on the table. According to the British stock exchange rules, CD&R now has until 17 July to make a final offer or withdraw.
Meanwhile, a third party has appeared on the scene. Apollo Global Management, another American investment fund, is also considering a bid for the supermarket chain. The investor has already called in the investment bank Morgan Stanley to advise on the matter, writes The Guardian. Apollo had already tried to take over Asda, but had to give the thumbs up to the Issa brothers, founders of the EG petrol station group, who acquired the supermarket chain for the equivalent of 7.5 billion euros.
Attractive target
Morrisons is considered attractive because it owns about 85% of its ‘assets’ – including its supermarkets – and because of its integrated business approach. It has long-term relationships with farmers and suppliers, its own food production sites (bakeries, slaughterhouses, etc.) and even its own fishing fleet. The chain has some 500 stores in the UK.
According to Andrew Gwynn, an equity analyst at Exane, Fortress’ bid has a good chance of being accepted by at least 75% of shareholders. “Fortress doesn’t seem to be proposing any aggressive change, with a focus on simply empowering the management team to deliver on their longer-term strategy. […] The deal is very likely to succeed,” he said.
