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(Reuters) – LONDON, July 5 (Reuters) – On Monday, a third private equity firm, Apollo Global Management, entered the $8.7 billion bidding war for Britain’s fourth largest grocery chain, Morrisons (MRW.L). Apollo, which missed out on buying Asda, the UK’s third largest supermarket chain, last year, said it was in the early stages of examining a possible offer for Morrisons but had not approached its board. Morrisons announced on Saturday that its board, led by Chairman Andrew Higginson, has suggested a 6.3 billion pound ($8.7 billion) buyout by SoftBank (9984.T)-owned Fortress Investment Group. find out more Fortress, along with Canada Pension Plan Investment Board and Koch Real Estate Investments, outbid Clayton, Dubilier & Rice (CD&R) on a 5.52 billion pound unsolicited offering, which Morrisons turned down on June 19. find out more It was, however, less than the 6.5 billion pounds sought by top 10 Morrisons shareholder JO Hambro last week. find out more Morrisons’ fate will ultimately be decided by its shareholders. They will vote on the Fortress agreement as things stand now. Morrisons’ three largest investors, Silchester, Blackrock, and Columbia Threadneedle, have holdings of 15.2 percent, 9.6 percent, and 9.4 percent, respectively, according to Refinitiv data. So yet, no one has made a comment. Analysts believe that other private equity firms, as well as Amazon (AMZN.O), which has a collaboration agreement with Morrisons, might spark a bidding war. Morrisons shares were up 11.4 percent at 267.3 pence at 0735 GMT, ahead of the Fortress deal’s 254 pence valuation, indicating that investors expect bigger bids to be made. CD&R has until July 17 to make a concrete bid under British acquisition regulations. The deadline for Apollo to clarify its intentions in relation to Morrisons has yet to be announced by the Takeover Panel. UNDERVALUED Morrisons’ interest reflects a growing appetite from private equity firms for British supermarket chains, which are considered as appealing because to their cash flow and freehold properties. In the aftermath of the COVID-19 pandemic, the funds believe the stock market is undervaluing the grocers. Morrisons began as an egg and butter distributor in 1899. In terms of annual sales, it now only trails UK market leader Tesco (TSCO.L), Sainsbury’s (SBRY.L), and Asda. Morrisons owns 85 percent of its almost 500 stores and has 19 production locations that are primarily freehold. It is the only British supermarket that produces more than half of the fresh food it sells. Last year, Apollo was outbid by brothers Zuber and Mohsin Issa and TDR Capital for the purchase of Asda. Asda was valued at 6.8 billion pounds in that deal. Tesco and Sainsbury’s shares were up 1% and 1.4 percent, respectively, on speculation that they could be targeted for bids. Both companies did not respond to requests for comment. Apollo claims to have over $89 billion in assets under control in 150 firms by the end of March 2021, including Watches of Switzerland, TMT giant Endemol Shine, bookmaker Ladbrokes Coral, and Norwegian Cruise Line. (1 dollar = 0.7232 pounds) James Davey contributed reporting, and Kate Holton, Guy Faulconbridge, and Kirsten Donovan edited the piece. The Thomson Reuters Trust Principles are our standards./nRead More

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