LONDON — The $8.7 billion bid battle for Britain's
Morrisons intensified on Monday when a third private equity group entered the
fray, sending the supermarket group's share price racing ahead of the value of
an offer it recommended on Saturday.
اضافة اعلان
New York-headquartered
Apollo Global Management, which last
year missed out on buying Morrisons rival Asda, said it was in the preliminary
stages of evaluating a possible offer but had not approached its board.
Private equity groups have embarked on a spending spree on
assets around the world in the last six months, flush with cash after they
largely sat out the pandemic. Morrisons, set up 122 years ago as a market stall
in northern England, is a target.
Morrisons said on Saturday that its board, led by Chairman
Andrew Higginson, had recommended a takeover led by
SoftBank owned Fortress
Investment Group that valued the grocer at 6.3 billion pounds ($8.7 billion).
The offer from Fortress, along with Canada Pension Plan
Investment Board and Koch Real Estate Investments, exceeded a 5.52 billion
pound unsolicited proposal from Clayton, Dubilier & Rice (CD&R), which
Morrisons rejected on June 19.
However, it was less than the 6.5 billion pounds asked for
by top 10 Morrisons investor JO Hambro last week.
Fortress' offer gives Morrisons an enterprise value of 9.5
billion pounds when including net debt of 3.2 billion pounds.
Its shares were up 11.2 percent at 267 pence at 0935 GMT —
ahead of the 254 pence value of the Fortress deal, indicating investors expect
higher offers to be made. Morrisons declined to comment on Apollo's statement.
Analysts have speculated that other private equity groups
and Amazon, which has a longstanding supplier deal with Morrisons, could also
bid. Amazon has declined to comment.
While Britain has always been a key destination in Europe
for private equity investments, the volumes have peaked this year as Brexit and
sterling weakness coupled with the coronavirus crisis to hit company
valuations.
Like its peers Tesco, Sainsbury's and Asda, Morrisons
enjoyed a surge in sales in the last 18 months, as hospitality was forced to
shut, but the cost of ramping up online delivery hit profits.
Ultimately, its fate will be decided by its shareholders.
As things currently stand there is only one firm bid on the
table and investors will vote on the Fortress deal.
Morrisons' three biggest investors Silchester, Blackrock and
Columbia Threadneedle, which Refinitiv data showed having stakes of 15.2%, 9.6%
and 9.4% respectively, are effectively the kingmakers. None has commented so
far.
Under UK takeover rules Fortress' offer effectively resets
the clock for CD&R to clarify its intentions, with a previous date of July
17 extended to around the end of the month.
The Takeover Panel is yet to announce the deadline by which
Apollo must clarify its intentions.
"254p now seems to be the likely minimum and we would
not rule out the eventual price rising further," said analysts at
Barclays.
Appetite for grocers
Barclays said CD&R could pay more than the agreed offer
from Fortress, pointing out that CD&R has a bigger UK retail footprint than
Fortress as it owns the Motor Fuels Group petrol forecourt chain. Also CD&R
might be able to bid more if sale and leasebacks of Morrisons stores form part
of its plan.
Fortress has ruled out material sales and says it likes to
empower existing management teams - an approach that could prove popular with
the government after the pandemic showed the importance of retaining food
production locally.
Morrisons owns 85 percent of its nearly 500 stores and has
19 mostly freehold manufacturing sites. It is unique among British supermarkets
in making over half of the fresh food it sells.
After years of grappling with the German discount rivals
Aldi and Lidl, British supermarkets are once again attractive because of their
cash generation and freehold assets. The funds believe the stock market is not
recognizing the grocers' value in the wake of the COVID-19 pandemic.
Morrisons started out as an egg and butter merchant in 1899
and was built up over 55 years by the late Ken Morrison, the son of the
founder.
Last year Apollo lost out on buying Asda to brothers Zuber
and Mohsin Issa and TDR Capital. That deal valued Asda at 6.8 billion pounds.
Shares in Tesco and Sainsbury's were up 1.5 percent and 1.9
percent respectively with speculation swirling that they could also attract
approaches. Both companies declined to comment.
In April, Czech billionaire Daniel Kretinsky raised his
stake in Sainsbury's to almost 10 percent, igniting bid speculation.
Apollo says its private equity business had more than $89
billion in assets under management by the end of March 2021, in 150 companies
such as Watches of Switzerland, TMT group Endemol Shine, bookmaker Ladbrokes
Coral and Norwegian Cruise Line.
Read more
Region & World
.jpg)
.jpg)
