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Investing

Morrisons investors set to rubber stamp $10 billion CD&R takeover

2021 10 18T233038Z 3 LYNXMPEH9H17U RTROPTP 4 MORRISONS M A CD R - Global Banking | Finance

LONDON (Reuters) – Shareholders in supermarket group Morrisons are expected on Tuesday to approve a 7 billion pound ($9.6 billion) offer by U.S. private equity firm Clayton, Dubilier & Rice (CD&R), bringing the curtain down on Britain’s most fiercely contested takeover this year.

CD&R, which has former Tesco boss Terry Leahy as a senior adviser, won an auction for Morrisons on Oct. 2, bidding a penny a share more than a consortium led by Softbank owned Fortress Investment Group.

Investor approval for the deal will conclude a six-month battle to buy Morrisons, Britain’s fourth-biggest grocer and one of the country’s biggest food producers.

It will end Morrisons’ 54-year run as a publicly listed company and see the ultimate decisions on the group’s future shift from its Bradford, northern England, base to the New York home of CD&R.

Morrisons, which started out as an egg and butter merchant in 1899, trails market leader Tesco, Sainsbury’s and Asda in annual revenue.

The battle for Morrisons has been the most high-profile amid a raft of bids for British companies this year, reflecting private equity’s appetite for cash-generating UK assets.

With the winning bid representing a hefty 61% premium on Morrisons’ share price before takeover interest publicly emerged in mid-June, analysts expect little or no dissent.

To go through CD&R’s offer needs the support of shareholders representing at least 75% in value of voting investors at the meeting, which is being held both physically and virtually.

CD&R has committed to retaining Morrisons’ Bradford headquarters and its existing management team, led by CEO David Potts.

It has also said it will execute the supermarket chain’s existing strategy, not sell its freehold store estate and maintain staff pay rates.

These commitments are not legally binding, however.

If, as expected, shareholders approve the offer, CD&R could complete its takeover by the end of the month, making Morrisons the second UK supermarket chain in a year to be acquired by private equity after a buyout of No. 3 player Asda, by the Issa brothers and TDR Capital, completed in February.

($1 = 0.7284 pounds)

(Reporting by James Davey; Editing by Susan Fenton)

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