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On September 10, 2020, a Morrisons store is seen in St Albans, England. FILE PHOTO: REUTERS/Peter Cziborra (Reuters) – LONDON, July 3 (Reuters) – Morrisons has agreed to a buyout headed by SoftBank’s (9984.T) Fortress Investment Group, valued at 6.3 billion pounds ($8.7 billion), beating off a competing offer from a US private equity group. The bid from Fortress, along with Canada Pension Plan Investment Board and Koch Real Estate Investments, outperforms Clayton, Dubilier & Rice’s (CD&R) 5.52 billion pound unsolicited offering, which Morrisons (MRW.L) rejected on June 19. find out more With Morrisons’ net debt of 3.2 billion pounds included in, Fortress’ bid values the company at 9.5 billion pounds. “We carefully considered Fortress’ approach, their business objectives, and their overall fit as the owner of a distinctive British food-maker and retailer with over 110,000 employees and a significant role in British food production and farming,” Morrisons Chairman Andrew Higginson stated. “It’s evident to us that Fortress fully comprehends and appreciates Morrisons’ basic character.” The Fortress acquisition demonstrates how private funds are increasingly interested in British supermarket groups, which are considered as appealing due to their cash flow and freehold properties. As of March, Fortress was a worldwide investment manager with roughly $53 billion in assets under management. It is a wholly owned subsidiary of Japan’s SoftBank Group Corp. In 2019, it bought Majestic Wine, a British wine retailer. “We are dedicated to being excellent stewards of Morrisons for the long term in order to best serve its stakeholder groups and the wider British public,” Joshua A. Pack, managing partner, stated. Morrisons’ existing management team, led by CEO David Potts, will be retained by Fortress, and the company’s current plan will be carried through. It stated that no material store sale and leaseback operations were planned. RECOMMENDATION Investors would receive 254 pence per share under the terms of the agreement, which Morrisons’ board is recommending to shareholders. This includes 252 pence in cash and a 2 penny special cash dividend. The offer from CD&R was 230 pence per share, or 5.52 billion pounds. JO Hambro, a top 10 stakeholder in Morrisons, suggested last week that any bidder for the company should make an offer of around 270 pence per share, or 6.5 billion pounds. find out more Morrisons began as an egg and butter business in Bradford, Northern England, in 1899. In terms of yearly sales, it now only follows 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. The Fortress offer represented a 42 percent premium to the company’s closing share price of 178 pence on June 18 – the day before CD&R’s bid. On Friday, the shares finished at 243 pence. Morrisons’ board of directors, who control 0.23 percent of the company, would profit 14.3 million pounds from the sale of their shares to Fortress. CD&R, which has until July 17 to make a solid bid under British acquisition laws, had no immediate response. Morrisons has a deal with Amazon (AMZN.O), and there has been speculation that it could be a bidder as well. FIVE PROPOSALSAccording to Morrisons, an initial unsolicited proposal from Fortress was received on May 4 at 220 pence per share. This offer was kept a secret. After that, Fortress made four more proposals before offering a total value of $254 per share on June 5. The bids for Morrisons come after Zuber and Mohsin Issa, as well as private equity firm TDR Capital, bought a majority share in Asda from Walmart in February (WMT.N). Asda was valued at 6.8 billion pounds in the purchase. find out more Following Sainsbury’s failure to take over Asda after an agreed-upon deal was banned by Britain’s competition regulator in 2019, that transaction was completed. Daniel Kretinsky, a Czech billionaire, increased his position in Sainsbury’s to nearly 10% in April, sparking bid speculation. further information ($1 = 0.7235 pounds) James Davey contributed reporting, and Jane Merriman edited the piece. The Thomson Reuters Trust Principles are our standards./nRead More

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