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July 22, 2021updated 23 Nov 2021 6:10am

Investment giant Apollo hopes to join Morrisons takeover

The UK’s fourth largest supermarket chain is at the center of a takeover bid from a consortium bolstered by the backing of Apollo, a multi-billion-dollar investment management firm.

By MarketLine  

The UK’s fourth largest supermarket chain is at the center of a takeover bid from a consortium bolstered by the backing of Apollo, a multi-billion-dollar investment management firm.

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The group currently consists of Fortress Investment Group, Canada Pension Plan Investment Board and Koch Real Estate Investments who are planning a 254p per share offer, amounting to a total bid of GBP6.3bn ($8bn).

Morrisons rejected a 235p or £5.52bn ($7bn) per share bid from US private equity firms Clayton Dubillier & Rice (CD&R) in June, according to the Guardian. Fortress has demonstrated commitment to Morrisons One of the key attractions for Morrisons is the strength of commitment made by the Fortress-led group and its track record in the retail space.

Fortress purchased UK wine retailer Majestic Wine in 2019 and has not engaged in typical private equity behaviors, such as leaseback, where stores are sold and rented back to save costs, or extensive job cuts.

In a letter to 3,000 farmers who supply Morrisons, Chief Executive David Potts, said the board believes Fortress would be a “suitable and responsible owner” and its pledges about the company’s future “carry genuine weight”.

Changes to the UK Takeover Code in the wake of the Kraft-Cadbury acquisition in 2011 mean that “the intentions document of an acquirer has a legally binding effect”, according to Morrisons’ Chief Commercial Officer, Trevor Strain.

Fortress has further reinforced its intentions to maintain the GBP10 ($12.82)/hour wage implemented for store colleagues, the highest in the market. While further assurance has been granted to preserve the current pension rights and benefits Morrisons offer, according to Potts. Apollo has also joined the Consortium Fortress’ already attractive offer is now backed by Apollo, a move that will disappoint shareholders according to a senior equity analyst at Hargreaves Lansdown. Apollo joining the group likely rules out a bidding war between the investment management giants and this means a lower price per share offering. Apollo reinforced Fortress’ commitments, stating, “Apollo would be fully supportive of Fortress’s stated intentions regarding Morrisons”. Any takeover deal would need approval from shareholders over the summer, although CD&R and other private equity firms could return to the negotiating table with higher bids. Morrisons has attracted attention from private equity firms due to recent high demand for the sector during the pandemic, while Morrisons themselves own 85% of its stores, resulting in an attractive property portfolio.

Free Report
img

How attractive are current investment opportunities in Europe?

Europe has been identified as one of the most favorable regions for investors, seeing high investment activity in the past year. Most of these investments have been through Debt Offering, valued at close to $700 billion. The region has provided attractive investments in a diverse set of companies. Companies who tend to major themes such Digital Media, Cloud, Artificial Intelligence, E-commerce, and Big Data are recording the highest number of deals, with Digital Media recording close to 2,000 deals. However, GlobalData’s whitepaper offers a full view of the market, analyzing less successful or attractive points of investment as well, examining statistics on Equity Offering investments and PE/VC deals. Understand how government agencies for economies around the world use GlobalData Explorer to:  
  • Track the M&A and Capital Raising volumes into their target market
  • Identify the top sectors in the target market attracting the investments
  • For any investment segment, identify the top Investors inside and outside the target economy that are already investing in the Segment
  • Assess and showcase the growth potential for various Industries in the target economy
Don’t miss out on key market insights that can help optimize your next investment – read the report now.
by GlobalData
Enter your details here to receive your free Report.