1. News
July 5, 2021

Morrisons agrees to $8.7bn offer from Fortress Investment Group

The supermarket chain rejected a $7.62bn offer from Clayton, Dubilier and Rice last month.

A consortium led by Fortress Investment Group has agreed to acquire British supermarket chain Morrisons for £6.3bn ($8.7bn).

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The agreement comes after the supermarket chain rejected an unsolicited, conditional non-binding proposal from US-based private equity firm Clayton, Dubilier and Rice (CD&R) last month.

CD&R had offered to pay £2.30 ($3.19) a share, or £5.5bn ($7.62bn), for the retailer.

This was surpassed by the consortium’s offer of £2.54 ($3.52) for each of Morrisons’ shares.

The consortium’s offer implies an enterprise value around 8.3 times greater than the retailer’s underlying earnings before interest, tax, depreciation and amortisation (EBITDA) for the 52 weeks ending on 31 January.

Morrisons chairman Andrew Higginson said: “We have looked very carefully at Fortress’ approach, their plans for the business and their overall suitability as an owner of a unique British food-maker and shopkeeper, with more than 110,000 colleagues and an important role in British food production and farming.

“It’s clear to us that Fortress fully understands and appreciate our fundamental character.”

Fortress plans to keep Morrisons’ existing management team, which is led by CEO David Potts, and implement its existing strategy. It will also keep the retailer’s headquarters in Bradford, UK.

There are currently no plans for material store sales or leaseback transactions.

Other members of the consortium include the Canada Pension Plan Investment Board and Koch Real Estate Investments.

Apollo Global Management has confirmed that it is ‘in the preliminary stages’ of evaluating a possible offer for Morrisons, on behalf of certain investment funds that the investment firm manages.

Apollo also said that it has not yet approached the Morrisons Board.

Despite being rejected by Morrisons, CD&R has until 17 July to make a fresh offer under British takeover rules.

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What’s missing from your IPO industry assessment?

IPO activity all but stopped in 2020, as the investment community grew wary of the effects of COVID-19 on economies. No matter how deserving a business was of flotation, momentum was halted by concerns of when a ‘new normal’ of working patterns and trade would set in. Recently, sentiment has changed. Flotations picked up again during the second half of 2021, and now in 2022 the mood is decidedly optimistic. Business leaders have their eyes on fast rebounding economies, buoyant market indices and the opportunity once again to take their businesses public. As a result, global IPOs are expected to hit back this year. With GlobalData’s new whitepaper, ‘IPOs in Consumer and Retail: 5 must-include elements for your prospectus industry report’, you can explore exactly what is needed in the essential literature. GlobalData’s focus lies in the critical areas to get right:
  • Macroeconomic and demographic environment
  • Consumer context
  • Industry environment
  • Competitive environment
  • Route to market
Interested to learn more about what to include in your IPO Industry Assessment report? Download our free whitepaper.
by GlobalData
Enter your details here to receive your free Report.