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© Reuters. File photo: Morrison store taken in St Albans, UK on September 10, 2020. REUTERS/Peter Cziborra//File photo
By James David
LONDON (Reuters)-Morrison has agreed to the Bastion Investment Group’s takeover offer, which has valued the UK’s fourth-largest supermarket operator at 6.3 billion pounds ($8.7 billion). Ranked among the best in the bidding.
Fortress’s bid exceeded the £5.52 billion proposal made by Clayton, Dubilier & Rice (CD&R). The proposal was supported by the Canadian Pension Plan Investment Board and Koch Real Estate Investment. Morrison rejected the proposal on June 19 Proposal, saying that the proposal is too low.
“The directors of Morrisons believe that the offer represents a fair and recommended price for shareholders, which recognizes Morrisons’ future prospects,” said Chairman Andrew Higginson.
“We studied Fortress’ methods, their business plans and their owners as a unique British food manufacturer and shopkeeper very carefully, with more than 110,000 colleagues and playing an important role in British food production and agriculture,” He says. .
Fortress is a global investment management company with approximately $53 billion in assets under management as of March.
“We are committed to being Morrison’s good steward in order to provide the best service to its stakeholder groups and the wider British public in the long term,” said managing partner Joshua A. Pack.
According to the terms of the transaction recommended by Morrison’s board to shareholders, investors will receive 254 pence per share, including 252 pence in cash and 2 pence in cash dividends.
Morrison, based in Bradford, northern England, started as an egg and butter merchant in 1899. Now its annual sales only lag behind market leaders Tesco (OTC:), Sainsbury’s and Asda.
Morrison owns 85% of its nearly 500 stores and owns 19 production bases that are mainly freehold. It is unique among British supermarkets, and the fresh food it produces accounts for more than half of its sales.
The company stated that the offer was a 42% premium to the closing price of 178 pence on June 18 (the last business day before the CD&R proposal).
Morrisons’ stock price closed at 243 pence on Friday, valuing the business at 5.8 billion pounds.
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CD&R did not immediately comment.
According to UK acquisition rules, CD&R must submit a firm offer before July 17.
Morrison signed a cooperation agreement with Amazon (NASDAQ:), and some speculated that it might also become a bidder.
Morrison said that on May 4, he received an initial initiative from Fortress at 220 pence per share. This proposal has not been made public. Fortress then made four proposals until its offer reached a total value of 254 shares per share on June 5.
The Fortress transaction highlights the growing appetite for the British supermarket group, which is seen as attractive due to the cash and freehold assets it generates.
In February, Zuber and Mohsin Issa and private equity firm TDR Capital purchased a majority stake in Asda from Walmart (NYSE:) in a transaction that valued the British grocery store at 6.8 billion pounds.
The transaction was made after Sainsbury failed to take over Asda after the UK competition regulator blocked an agreed transaction in 2019.
In April, Czech billionaire Daniel Kretinsky raised his stake in Sainsbury’s to nearly 10%, sparking bidding speculation.
(1 USD = 0.7235 GBP)
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