1. News
November 1, 2021

CMA to investigate CD&R’s Morrisons takeover for consumer issues

Morrisons shareholders approved CD&R's £7bn takeover deal last month.

The UK’s Competition and Markets Authority (CMA) has issued an initial enforcement order on US-based private equity firm Clayton, Dubilier & Rice’s (CD&R) takeover of British supermarket chain Morrisons.

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The CMA said that CD&R should ensure Morrisons’ operations stay separate from those of Motor Fuel Group (MFG), which the finance firm acquired in 2015, until any potential effects on consumers had been taken into account.

The order was served under section 72(2) of the Enterprise Act 2002, which prevents the two companies from integrating their operations or transferring ownership.

It comes after the deal was approved by Morrisons shareholders last month.

In its order, the CMA said: “The CMA has reasonable grounds for suspecting that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in CD&R and Morrison Supermarkets ceasing to be distinct.”

Last month, CD&R agreed to purchase Morrisons for £7bn ($9.5bn), or £2.87 ($3.91) for each of the retailer’s ordinary shares.

The supermarket chain’s board approved the bid after an intense three-round auction against fellow private equity company Fortress Investment Group.

It is understood that the private equity firm may combine its MFG forecourts with those owned by Morrisons.

MFG was acquired by CD&R in 2015 and currently has more than 900 forecourts in the UK, while Morrisons has 335.

Once the deal is completed, CD&R will own more than 1,200 petrol stations in the UK.

The CMA now has up to four months to decide whether or not to launch a full inquiry. A full investigation could take more than six months to complete.

CD&R was quoted by The Guardian as saying: “As expected, the CMA has issued an initial enforcement order and CD&R looks forward to working constructively with the CMA to address any questions they may have.”

Free Whitepaper
img

What is the impact of historically high inflation on the UK consumer landscape?

The average UK consumer is experiencing a severe cost-of living crisis as inflation surges to a forty-year high and the price of goods continues to rise. This shock is the result of the sharply increasing costs of commodities, energy, and the ongoing conflict in Ukraine, and is threatening FMCG manufacturers, retailers, and foodservice operators’ ability to survive and grow. Inflation will have a profound effect on many consumer-facing industries in 2022 and beyond. Consult GlobalData’s new whitepaper, Inflation in the UK: The Impact of Historically High Inflation on the UK Consumer Landscape, to better understand shifts in consumer behavior and their impact on spending patterns, as well as the implications for UK businesses. This whitepaper covers:  
  • Why has global inflation returned with a vengeance?
  • What is the current inflation situation in the UK?
  • What impact is inflation having on UK retail sales?
  • What tactics are businesses relying on to tackle the effects of high inflation?
  • How are consumers changing their behaviors to cope with the higher cost of living?
  • Which industry sectors are most vulnerable to reduced consumer demand?
  • How is the government responding to high inflation?
  • How long will high inflation last in the UK?
  • How can your company survive and thrive in a high inflation environment?
Enter your details here to receive your free whitepaper and ready your business for these increasingly uncertain times.
by GD50 Custom
Enter your details here to receive your free Whitepaper.