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The American investment company Clayton Dubilier & Rice (CD&R) has attempted to buy British supermarket chain Morrisons, but its bid of 5.5 billion pounds (6.4 billion euros) was rejected.
“Significant undervaluation”
On Saturday evening, Morrisons reported that it rejected a preliminary takeover bid worth just over 5.5 billion pounds from CD&R, even though the retailer was valued at ‘only’ 4.3 billion pounds (5 billion euros) on the stock exchange, based on Friday’s closing price.
Nevertheless, Morrisons described the conditional proposal one that “significantly undervalued Morrisons and its future prospects“, The Guardian writes. According to UK takeover rules, CD&R has until 17 July to make a final offer or withdraw.
Target
CD&R declined to comment on whether it would come back with a higher bid, but analysts consider this probability very high. According to them, the cash flows and real estate assets of Morrisons – and other supermarket groups – make it attractive targets for private equity players.
Morrisons employs 121,000 people and posted annual profits of 408 million pounds (470 million euros) before the pandemic. Last year, profits halved due to higher costs related to Covid. The company owns 85 % of its 497 stores and has 19 production sites, including bakeries, abattoirs, fishing fleets and egg farms. A quarter of what it sells comes from its own supply chain.
