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Morrisons takeover battle poised for auction

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·Contributor
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A view of a Morrisons supermarket in Stratford, east London on June 21, 2021. - Shares in British supermarket chain Morrisons surged today after it rejected a £5.5-billion ($7.6-billion, 6.4-billion-euro) takeover approach as too low. (Photo by Tolga Akmen / AFP) (Photo by TOLGA AKMEN/AFP via Getty Images)
The auction would wrap up a three-month battle between private equity firms Clayton, Dubilier & Rice (CD&R) and Fortress. Photo: Tolga Akmen/AFP via Getty

Supermarket chain Morrisons (MRW.L) has been the subject of a bidding war over recent months, however, on Wednesday it confirmed that an auction could soon decide its future.

The grocer told the City that it is in discussions with the UK’s Takeover Panel, which regulates acquisition activity, to start an auction process.

This would wrap up a three-month battle between private equity firms Clayton, Dubilier & Rice (CD&R) and Fortress. It would also end ongoing uncertainty for the company, its employees and suppliers, after neither of the firms declared a final offer.

The Takeover Panel is expected to make an announcement soon, with a date for later this month expected to be set for any bidders to make their offers final.

The UK's fourth largest supermarket chain added that shareholders will vote on the deal in or around the week of 18 October.

Read more: Why Morrisons has become a takeover target

Morrisons said that because neither firm had declared their offer final, “such that either offer may be further increased or otherwise revised, a competitive situation continues to exist.”

The supermarket said: “In addition to the financial terms of any offer, the Morrisons board continues to place very significant emphasis on the wider responsibilities of ownership of Morrisons.

“These responsibilities include a recognition of the importance to the Morrisons business of all stakeholders, including colleagues, customers, pension trustees and suppliers as well as the distinct heritage and history of Morrisons and the legacy of Sir Ken Morrison.”

It comes after Morrisons accepted a £7bn ($9.6bn) offer, or £9.7bn including debt, from US-based CD&R, which counts former Tesco boss Terry Leahy as an advisor. This represented a 60% premium to its share price before takeover interest started in June.

Read more: Morrisons takeover bid raised to £6.7bn by Fortress

This was after it previously recommended investors accept an earlier £6.7bn offer from Fortress, which controls Majestic Wine and is owned by Japanese investment firm SoftBank (SFTBY).

If Fortress declines to come back, CD&R could emerge victorious, however the company has said it is considering its options, and urged shareholders to take no action.

Morrisons stock
Morrisons shares were 0.5% higher on Wednesday. Chart: Yahoo Finance UK

Morrisons, which has now been catapulted onto the FTSE 100 (^FTSE) after a 60% rise this year, was 0.5% higher on Wednesday.

The prospect of a higher bid could mean that the business would overtake Sainsbury's (SBRY.L) as Britain's second largest supermarket by market capitalisation. Three months ago, Morrisons was worth just £4.3bn and Sainsbury's £6.3bn.

Watch: Morrisons takeover battle heats up as fresh £7bn US takeover offer trumps rival

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