image copyrightPA Media A rival offer for Morrisons is being considered by a US investment firm, only days after the UK grocer agreed to a £6.3 billion ($8.7 billion) takeover. Although Apollo Global claimed it was exploring the move, Morrisons has yet to be approached. It’s the third company in two months to express interest in the UK brand, fueling rumours of a bidding battle. Morrisons accepted a bid from a US investment group led by the owner of Majestic Wine on Saturday. The acquisition attempt, led by Fortress Investment Group of the United States, is subject to shareholder approval, although the grocery chain’s board of directors has recommended that it be accepted. Morrisons is the UK’s fourth largest grocery business, employing approximately 110,000 people across nearly 500 stores. Morrisons supermarket has agreed to a £6.3 billion takeover. The Asda takeover ‘may result in higher gasoline prices,’ according to experts. Apollo said it was “in the beginning stages of examining a possible bid for Morrisons” in a short statement released on Monday. “No contact has been made to the board of Morrisons,” it stated. There can be no assurance that any offer will be made, or that any offer will be made on the terms that any such offer will be made.” Morrisons’ stock increased by 11% to 269p on Monday. That pushed it over Fortress’s weekend offer of 254p per share, which was a 42 percent premium to the retailer’s share price prior to the offer period. The offer “indicates investors believe there could be more juice to be extracted from this particular bidding war,” according to Neil Wilson, an analyst at Markets.com. “I believe there will be another offer or two, and 280p might be seen before a knockout.” We’ve talked about how much private equity money is waiting for UK companies that are undervalued compared to their international peers on a regular basis.” TOLGA AKMEN, TOLGA AKMEN, TOLGA AKMEN, TOLGA Morrisons CEO Andrew Higginson said over the weekend that the company’s “performance during the epidemic” had enhanced its stance, allowing it to initiate conversations with Fortress from a “hard-won position of strength.” He claimed the group had a “complete knowledge and appreciation of Morrisons’ core essence.” Fortress managing partner Joshua A Pack stated that the company was committed to becoming “excellent stewards of Morrisons.” Morrisons turned down a £5.5 billion offer from Clayton, Dubilier & Rice (CD&R) last month, claiming the offering was grossly undervalued. CD&R has until July 17 to make a concrete bid under UK acquisition laws. The deadline for Apollo to clarify its intentions in relation to Morrisons has yet to be announced by the Takeover Panel. Other private equity firms and e-commerce behemoth Amazon, which has a deal with Morrisons, might also join the race, according to analysts. You’ve been waiting for a bidder for one of the UK’s major grocery chains for a long time, and then three come up at once. Since another US private equity firm, Clayton, Dubillier & Rice (CDR), made the first takeover offer for Morrisons a fortnight ago, speculation has swirled that Apollo would be a bidder. Morrisons then caught the market off guard by announcing on Saturday morning that it had reached an agreement with a group of investors led by Fortress Investment, a competitor of CDR. Apollo has now officially entered the fray, stating that it is considering its own offer. While it has not yet approached Morrisons’ board of directors, a statement to the stock exchange confirming interest indicates that this is more than a passing whim. The market is plainly anticipating a bidding war. Morrisons shares were up 11% to 269p this morning, much above the 254p a share price agreed upon by the board and Fortress. CDR may return, Apollo is on the verge of joining the race, and some haven’t given up hope that Amazon will join the fray. For the time being, though, Fortress remains the favorite, thanks to a recommendation from the Morrisons’ board of directors. What are the prospects of copycat offers for Tesco and J Sainsbury’s, the other two main listed UK supermarket chains? Tesco’s market capitalization is approximately £18 billion, roughly three times the magnitude of the Morrisons purchase. Sainsbury’s also has a potential blocking stakeholder in the form of Qatar Holdings, which owns 15% of the company. Sainsbury’s could be a takeover target if the Qataris can be persuaded to cooperate. Due to their enormous property portfolios, many private equity groups have started focusing on UK supermarkets, which they see as inexpensive and attractive. Last year, Apollo was outbid by the Issa brothers and TDR Capital for the purchase of Asda, the UK’s third largest retail chain. Fortress has stated that it will not sell any of Morrisons’ assets and will protect workers’ employment and wages as part of its offer. Nonetheless, Labour has urged governments to guarantee that the group’s obligations are “legally obligatory and fulfilled.” The Unite union has stated that it will not participate in any sale until “unbreakable guarantees” on jobs and conditions are provided. “Quite often private equity will look at the potential for growth, and what is there to do in these firms,” Catherine Shuttleworth, head of retail research group Savvy, told the BBC’s Today programme. And it’s possible that they believe there’s a lot more there and that they can do something with it. It’s possible they’re complementary to other firms they own, and they believe they can add value to other businesses by investing in them.” She predicted that whoever bought the chain would make modifications. Under UK takeover guidelines, however, they would be obligated to keep their promises. RetailingCompaniesMorrisons/n
Read More
