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According to two people with direct knowledge of the matter, the US private equity group Clayton, Dubilier & Rice has bid to acquire the supermarket chain Wm Morrison. This transaction will privatize the fourth largest grocery store in the UK.
One of them said that Morrison’s board of directors, with a market capitalization of 4.3 billion pounds and a net debt of 3.2 billion pounds, will meet on Saturday to discuss the advantages of this approach. The company is working with Rothschild and declined to comment.
Another person added that CD&R is cooperating with Goldman Sachs to bid. A statement clarifying its intentions may be released later on Saturday.
The exact value of the offer could not be immediately known, but Sky News reported that CD&R is weighing its bid for Morrison, which is valued at approximately £5.5 billion. CD&R and Morrison declined to comment.
This approach highlights the growing interest of private equity in British assets, especially supermarket chains.
Since the beginning of this year, as Brexit and the pandemic have put pressure on share prices, the acquiring group has announced bids for at least 12 UK listed companies. Refinitiv data shows that this is the fastest privatization attempt in more than 20 years.
The CD&R approach comes as the competition regulator this week approved the purchase of Asda, the third largest supermarket chain in the UK, for £6.8 billion, the owners of gas station retailer EG Group, billionaire brothers Mohsin and Zuber Issa, and private equity firm TDR Capital. transaction.
CD&R’s advisors include Sir Terry Leahy, the former CEO of Tesco. The current Morrisons chairman Andrew Higginson has worked with Leahy for many years at Tesco. It is also an investor in Motor Fuel Group, EG Group’s gas station competitor.
Since 2015, the Morrison management team led by CEO Dave Potts has been trying to reverse business performance, including partnerships with Amazon and Deliveroo.
However, the market did not reward them. The share price is now lower than it was when Potts took over. It has fallen 6.3% in the past year, while the FTSE 100 Index of the UK’s top company earlier this year has risen 11.5%. It was downgraded.
Earlier this month, 70% of shareholders Refused Its salary arrangements.
In the year to the end of January, the company reported an 8% increase in same-store sales, but due to a sharp drop in fuel sales, total revenue only increased 0.4% to £17.5 billion.
Covid-related costs affected profits, and net income increased by 0.5% to £96 million. According to Capital IQ, it has 118,000 employees.
For a long time, analysts have speculated that the group might be attracted by its cash generation to bidders and, like third-ranked Asda, owns a high percentage of freehold stores.
CD&R is one of the more active private equity companies in the UK market this year. It agreed to acquire UDG, a UK-listed healthcare service group, for 2.8 billion pounds, and to acquire Wolseley, a pipeline business, for 308 million pounds.
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