Shares in British supermarket Morrisons rose in early trading on Friday as investors welcomed news of the £7 billion ($9.53bn) buyout bid from US private equity firm Clayton Dubilier & Rice (CD&R) as the battle to take over the brand heats up.
The grocery chain’s stock was up as much as 4.5 per cent in early trading, after the Morrisons board said late on Thursday it would unanimously recommend CD&R’s £2.85 a share bid worth £7bn and drop the £6.7bn offer from Softbank-owned Fortress Investment Group, which it accepted earlier this month.
However, analysts said Morrisons' rising share price indicates Fortress might come back with a counter offer.
“Supermarkets were one of retail’s big lockdown winners and the allure of those retail juggernauts has been clearly visible over the past weeks as the battle to takeover Morrisons has pulled no punches,” said Danni Hewson, financial analyst at AJ Bell.
“In the dying minutes of what could be the final round, first bidder CDR got it’s second wind and delivered a £7bn knockdown offer. Will Fortress pick itself of the mat and find another level? It is a real possibility.”
The battle to buy Morrisons, Britain’s fourth largest grocer after Tescos, Sainsbury’s and Asda, highlights the private equity appetite for British supermarkets after the UK grocery sector saw their fortunes change dramatically during the pandemic when a series of lockdowns triggered a surge in food spending.
Asda was snapped up in a £6.8bn buy-out by the Issa brothers and London private equity firm TDR Capital last year, who took on £3.5bn of debt to fund the acquisition from Walmart. Interest has also zoned in on Sainsbury’s in response to the company's bullish growth.
Meanwhile, Morrisons has attracted interest because of its large real estate portfolio, with the company owning about 90 per cent of its almost 500 stores.
The business, whose turnaround has been led by chief executive Dave Potts, generates large amounts of cash and has low underlying debt and a pension surplus.
The latest offer from CD&R is the second from the company, which had its previous bid of £2.30 a share, worth £5.52bn, rejected.
“CD&R is widely recognised for being a trusted partner to the management teams of the businesses in which it invests and for providing ongoing support to help them innovate, develop, and grow their operations,” Morrisons said.
Fortress has also submitted two offers, with expectations it will make a third, while rumours are also swirling that tech giant Amazon could also enter the fray.
“Morrisons is unique, its production capabilities make it extremely attractive at a time supply is becoming a huge issue and the Japanese bank behind Fortress has deep pockets,” said Ms Hewson.
“Then there’s the Amazon factor. No one really expects they’ll table a bid, but even their position on the field is huge factor.”
Morrisons shareholders will vote on CD&R's offer at meetings expected in the first half of October.
Under British takeover rules, Fortress could still return with a higher offer before those meetings, with the company saying on Thursday it was "considering its options".
If Fortress did make another offer, the Takeover Panel, which governs merger and acquisition activity in the UK, could instigate an auction process.
However, Ms Hewson said CD&R Rice appear a “more natural fit for the Yorkshire business” while shareholder sentiment will be boosted by the presence of “retail royalty” and former Tesco boss Sir Terry Leahy, who is a senior advisor on this deal.
“But ultimately this is a numbers game and in business sentiment often only goes so far,” Ms Hewson said.
Some politicians have raised concerns that a private equity buyout could cut jobs and sell off large chunks of the grocer's real estate portfolio.
However, CD&R has committed to retain Morrisons' existing management team and execute its strategy. It said material store sale and leaseback transactions were not planned.
CD&R's current investments include Motor Fuel Group, which operates 918 fuel forecourts in the UK. Morrisons owns 339 fuel forecourts.
“CD&R’s forecourt operation might require a few tweaks to please the UK’s competition watchdog,” said Ms Hewson, “but adding Morrisons’ to the portfolio will put them in a strong position to be at the forefront of the switch to electric.”
UAE currency: the story behind the money in your pockets
EA Sports FC 26
Publisher: EA Sports
Consoles: PC, PlayStation 4/5, Xbox Series X/S
Rating: 3/5
More coverage from the Future Forum
The specs
Price, base / as tested Dh1,470,000 (est)
Engine 6.9-litre twin-turbo W12
Gearbox eight-speed automatic
Power 626bhp @ 6,000rpm
Torque: 900Nm @ 1,350rpm
Fuel economy, combined 14.0L / 100km
UAE currency: the story behind the money in your pockets
UAE squad
Ali Kashief, Salem Rashid, Khalifa Al Hammadi, Khalfan Mubarak, Ali Mabkhout, Omar Abdelrahman, Mohammed Al Attas (Al Jazira), Mohmmed Al Shamsi, Hamdan Al Kamali, Mohammad Barghash, Khalil Al Hammadi (Al Wahda), Khalid Eisa, Mohammed Shakir, Ahmed Barman, Bandar Al Ahbabi (Al Ain), Adel Al Hosani, Al Hassan Saleh, Majid Suroor (Sharjah), Waleed Abbas, Ismail Al Hammadi, Ahmed Khalil (Shabab Al Ahli Dubai) Habib Fardan, Tariq Ahmed, Mohammed Al Akbari (Al Nasr), Ali Saleh, Ali Salmeen (Al Wasl), Hassan Al Mahrami (Baniyas)
'HIJRAH%3A%20IN%20THE%20FOOTSTEPS%20OF%20THE%20PROPHET'
%3Cp%3E%3Cstrong%3EEdited%20by%3A%3C%2Fstrong%3E%20Idries%20Trevathan%3Cbr%3E%3Cstrong%3EPages%3A%3C%2Fstrong%3E%20240%3Cbr%3E%3Cstrong%3EPublisher%3A%3C%2Fstrong%3E%20Hirmer%20Publishers%3Cbr%3E%3Cstrong%3EAvailable%3A%3C%2Fstrong%3E%20Now%3C%2Fp%3E%0A
Mohammed bin Zayed Majlis
Zayed Sustainability Prize
More on Quran memorisation:
Killing of Qassem Suleimani
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
The biog
Name: Maitha Qambar
Age: 24
Emirate: Abu Dhabi
Education: Master’s Degree
Favourite hobby: Reading
She says: “Everyone has a purpose in life and everyone learns from their experiences”
'Cheb%20Khaled'
%3Cp%3E%3Cstrong%3EArtist%3A%20%3C%2Fstrong%3EKhaled%3Cbr%3E%3Cstrong%3ELabel%3A%20%3C%2Fstrong%3EBelieve%3Cbr%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A
Biog
Mr Kandhari is legally authorised to conduct marriages in the gurdwara
He has officiated weddings of Sikhs and people of different faiths from Malaysia, Sri Lanka, Russia, the US and Canada
Father of two sons, grandfather of six
Plays golf once a week
Enjoys trying new holiday destinations with his wife and family
Walks for an hour every morning
Completed a Bachelor of Commerce degree in Loyola College, Chennai, India
2019 is a milestone because he completes 50 years in business
Results:
5pm: Maiden (PA) Dh80,000 1,400m | Winner: Eghel De Pine, Pat Cosgrave (jockey), Eric Lemartinel (trainer)
5.30pm: Maiden (PA) Dh80,000 1,400m | Winner: AF Sheaar, Szczepan Mazur, Saeed Al Shamsi
6pm: Sheikh Zayed bin Sultan Al Nahyan National Day Cup (PA) Group 3 Dh500,000 1,600m | Winner: RB Torch, Fabrice Veron, Eric Lemartinel
6.30pm: Sheikh Zayed bin Sultan Al Nahyan National Day Cup (TB) Listed Dh380,000 1,600m | Winner: Forjatt, Chris Hayes, Nicholas Bachalard
7pm: Wathba Stallions Cup for Private Owners Handicap (PA) Dh 70,000 1,400m | Winner: Hawafez, Connor Beasley, Ridha ben Attia
7.30pm: Handicap (PA) Dh 80,000 1,600m | Winner: Qader, Richard Mullen, Jean de Roaulle
PSA DUBAI WORLD SERIES FINALS LINE-UP
Men’s:
Mohamed El Shorbagy (EGY)
Ali Farag (EGY)
Simon Rosner (GER)
Tarek Momen (EGY)
Miguel Angel Rodriguez (COL)
Gregory Gaultier (FRA)
Karim Abdel Gawad (EGY)
Nick Matthew (ENG)
Women's:
Nour El Sherbini (EGY)
Raneem El Welily (EGY)
Nour El Tayeb (EGY)
Laura Massaro (ENG)
Joelle King (NZE)
Camille Serme (FRA)
Nouran Gohar (EGY)
Sarah-Jane Perry (ENG)
Tree of Hell
Starring: Raed Zeno, Hadi Awada, Dr Mohammad Abdalla
Director: Raed Zeno
Rating: 4/5
FIGHT CARD
1. Featherweight 66kg
Ben Lucas (AUS) v Ibrahim Kendil (EGY)
2. Lightweight 70kg
Mohammed Kareem Aljnan (SYR) v Alphonse Besala (CMR)
3. Welterweight 77kg
Marcos Costa (BRA) v Abdelhakim Wahid (MAR)
4. Lightweight 70kg
Omar Ramadan (EGY) v Abdimitalipov Atabek (KGZ)
5. Featherweight 66kg
Ahmed Al Darmaki (UAE) v Kagimu Kigga (UGA)
6. Catchweight 85kg
Ibrahim El Sawi (EGY) v Iuri Fraga (BRA)
7. Featherweight 66kg
Yousef Al Husani (UAE) v Mohamed Allam (EGY)
8. Catchweight 73kg
Mostafa Radi (PAL) v Abdipatta Abdizhali (KGZ)
9. Featherweight 66kg
Jaures Dea (CMR) v Andre Pinheiro (BRA)
10. Catchweight 90kg
Tarek Suleiman (SYR) v Juscelino Ferreira (BRA)
The biog
Title: General Practitioner with a speciality in cardiology
Previous jobs: Worked in well-known hospitals Jaslok and Breach Candy in Mumbai, India
Education: Medical degree from the Government Medical College in Nagpur
How it all began: opened his first clinic in Ajman in 1993
Family: a 90-year-old mother, wife and two daughters
Remembers a time when medicines from India were purchased per kilo
MATCH INFO
Liverpool v Manchester City, Sunday, 8.30pm UAE
The specs
Engine: 2.0-litre 4cyl turbo
Power: 261hp at 5,500rpm
Torque: 405Nm at 1,750-3,500rpm
Transmission: 9-speed auto
Fuel consumption: 6.9L/100km
On sale: Now
Price: From Dh117,059
More from Neighbourhood Watch
How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
- Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
- Upload the training certificate from a centre accredited by the GCAA
- Submit their request
What are the regulations?
- Fly it within visual line of sight
- Never over populated areas
- Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
- Users must avoid flying over restricted areas listed on the UAE Drone app
- Only fly the drone during the day, and never at night
- Should have a live feed of the drone flight
- Drones must weigh 5 kg or less
More from Neighbourhood Watch:
KILLING OF QASSEM SULEIMANI
Marathon results
Men:
1. Titus Ekiru(KEN) 2:06:13
2. Alphonce Simbu(TAN) 2:07:50
3. Reuben Kipyego(KEN) 2:08:25
4. Abel Kirui(KEN) 2:08:46
5. Felix Kemutai(KEN) 2:10:48
Women:
1. Judith Korir(KEN) 2:22:30
2. Eunice Chumba(BHR) 2:26:01
3. Immaculate Chemutai(UGA) 2:28:30
4. Abebech Bekele(ETH) 2:29:43
5. Aleksandra Morozova(RUS) 2:33:01
Best Academy: Ajax and Benfica
Best Agent: Jorge Mendes
Best Club : Liverpool
Best Coach: Jurgen Klopp (Liverpool)
Best Goalkeeper: Alisson Becker
Best Men’s Player: Cristiano Ronaldo
Best Partnership of the Year Award by SportBusiness: Manchester City and SAP
Best Referee: Stephanie Frappart
Best Revelation Player: Joao Felix (Atletico Madrid and Portugal)
Best Sporting Director: Andrea Berta (Atletico Madrid)
Best Women's Player: Lucy Bronze
Best Young Arab Player: Achraf Hakimi
Kooora – Best Arab Club: Al Hilal (Saudi Arabia)
Kooora – Best Arab Player: Abderrazak Hamdallah (Al-Nassr FC, Saudi Arabia)
Player Career Award: Miralem Pjanic and Ryan Giggs
In Full Flight: A Story of Africa and Atonement
John Heminway, Knopff
Pakistan Super League
Previous winners
2016 Islamabad United
2017 Peshawar Zalmi
2018 Islamabad United
2019 Quetta Gladiators
Most runs Kamran Akmal – 1,286
Most wickets Wahab Riaz –65
