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(Reuters) – LONDON, July 3 (Reuters) – Morrisons (MRW.L) has agreed to a takeover by Fortress Investment Group, which is owned by SoftBank (9984.T). The deal values the UK’s fourth-largest supermarket chain 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 It was, however, less than the 6.5 billion pounds sought by top 10 Morrisons shareholder JO Hambro last week. find out more Shareholders will be able to vote on the Fortress offer, which values the grocery chain at 9.5 billion pounds after subtracting its 3.2 billion in net debt. CD&R has until July 17 to make a concrete bid under British acquisition regulations. CD&R did not respond to a request for comment. Other private equity firms and Amazon (AMZN.O), which has a collaboration agreement with Morrisons, might potentially enter the bidding war, according to analysts. The Fortress deal demonstrates how private funds are increasingly interested in British grocery chains, which are considered as appealing due to their cash flow and freehold properties. “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.” ‘GOOD STEWARDS’Fortress is a worldwide investment manager with roughly $53 billion in assets under management as of March. It is an independently operated 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 over the long term in order to best serve its stakeholder groups and the wider British public,” managing partner Joshua A. Pack said. The opposition Labour Party in the United Kingdom, on the other hand, has called for the administration to be scrutinized closely. On September 10, 2020, a Morrisons store is seen in St Albans, England. FILE PHOTO: REUTERS/Peter Cziborra “Ministers must work swiftly with Morrisons and the consortium to ensure that important agreements to preserve the employees and the pension scheme are legally enforceable and met,” said Seema Malhotra, Labour’s business spokesman. Morrisons’ headquarters in Bradford, Northern England, and its existing management team, led by CEO David Potts, will be retained by Fortress, and the company’s existing plan will be carried through. There are no plans for material store sales or leasebacks. Selling his shares to Fortress would net Potts 9.2 million pounds, while Chief Operating Officer Trevor Strain would collect 3.6 million pounds. 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. Morrisons began as an egg and butter distributor in 1899. In terms of yearly sales, it now only follows 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. 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. FIVE SUGGESTIONS Fortress made an initial unsolicited offering on May 4 at 220 pence per share, according to SMorrisons. 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. find out more (1 dollar = 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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