Who is trying to take over Morrisons?

By Tom Blackburn

Supermarket chain Morrisons is currently at the centre of a multi-billion pound takeover battle, as two potential suitors do battle for the company.

The competition between the two bidders - both US private equity firms - now looks as if it’ll be decided by an auction process, a rarity in the world of corporate buyouts.

Morrisons’ profits fell by half in 2020 as the impact of the pandemic hit home, but the interest in the firm from its potential buyers suggests they have confidence in its long-term prospects.

But who are the bidders currently vying to take control of Morrisons, and what is the potential takeover likely to mean for shoppers?

Who is trying to take over Morrisons?

Two potential buyers are in the running to take Morrisons over: private equity firms Clayton, Dubilier & Rice (CD&R) and Fortress Investment Group, owned by Japanese finance giant Softbank.

A £7billion offer from CD&R - which has former Tesco chief executive Sir Terry Leahy as a senior adviser - was agreed with Morrisons in August.

Former Tesco chief executive Sir Terry Leahy is advising CD&R on their Morrisons bid (Getty Images for ReSource 2012)

Fortress had previously made offers of £6.5bn and £6.7bn, and may come back with an improved offer. Neither bidder has declared its offer final, and Morrisons remains in discussions with both.

Given the apparent stalemate, Morrisons has also revealed that it has been in talks with the Takeover Panel about finding “an orderly framework for the resolution of this competitive situation”.

What is the Takeover Panel?

The Takeover Panel is an independent regulatory body that is responsible for the proper administration of the Takeover Code.

In other words, it governs mergers and acquisition deals in the UK.

Morrisons shareholders’ meetings to vote on the offer from CD&R are expected to take place from around October 18.

If there is to be an auction to settle the matter, it’ll take place before these meetings on a date determined by the Takeover Panel.

Morrisons saw its profits halve in 2020, but that hasn't deterred its would-be buyers (PA)

What does the Morrisons takeover mean for consumers?

Morrisons is Britain’s fourth-largest supermarket chain - after Tesco, Sainsbury’s and Asda - so its takeover by private equity could have consequences for consumers.

For some, the prospect of private equity ownership will ring alarm bells. For instance, department store chain Debenhams, which finally collapsed as a result of the pandemic, was taken over by private equity firm Baroness Retail in 2003.

Its owners made a quick profit by selling 23 outlets for £495million and leasing them back, but by the time it returned to the stock market in 2006, it was mired in £1bn of debt.

The two bidders for Morrisons have so far kept their plans for the company largely under wraps, however.

It’s worth noting that CD&R already has experience in the UK retail sector, having invested in homewares retailer B&M in 2012.

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