Daily Management Review

Acquisition Battle For Britain's Morrisons Hots Up With Apollo Global Jumping In


Acquisition Battle For Britain's Morrisons Hots Up With Apollo Global Jumping In
A third bidder, Apollo Global Management, entered the fray for the $8.7 billion bid battle for the fourth largest supermarket group of the United Kingdom, Morrisons, flaring up the fight even more.
The United States based company was in the preliminary stages of evaluating a possible offer for Morrisons and that its board had not been approached yet with the proposal, said Apollo which was in the fray last year for acquiring Asda, the third largest grocery firm in the UK, 
The board of Morrisons led by Chairman Andrew Higginson, had pushed in favour of an acquisition bid that is led by SoftBank owned Fortress Investment Group and which values the supermarket group at 6.3 billion pounds ($8.7 billion), Morrisons said on Saturday.
There was an unsolicited proposal from Clayton, Dubilier & Rice (CD&R for Morrisons worth 5.52 billion pound, which was not accepted by Morrisons on June 19, and the current offers from Fortress as well as that from Canada Pension Plan Investment Board and Koch Real Estate Investments was more than that offer.
However last week, the top 10 Morrisons investor JO Hambro had called for a bid for at least 6.5 billion pounds for the supermarket.
The ultimate outcome of the acquisition bids would be decided upon by the shareholders of the company and according to the current situation, it is likely that the shareholders will vote for the Fortress bid offer.
The effective deal makers for Morrisons are the three largest investors of the company - Silchester, Blackrock and Columbia Threadneedle, which stakes of 15.2, 9.6 and 9.4 per cent respectively, according to data from Refinitiv.
There can also be a possible bidding war if other private equity groups and Amazon, which already has a partnership deal with Morrisons, jumps into the fray, speculated analysts.
CD&R has until July 17 to come back with a firm offer according to British acquisition rules. The deadline within which Apollo need to clarify its intentions in relation to Morrisons was is to be announced by the Takeover Panel.
The increasing interest in British supermarket chains, which are viewed to be attractive acquisition targets because of their cash generation and freehold assets, is exhibited by the interest of private funds in Morrisons. The value of the grocers' value in the wake of the Covid-19 pandemic us not being recognised by the stock market, believes the funds.
Having started off as egg and butter merchant in 1899, Morrisons now has grown to become the fourth largest supermarket chain in the UK – exceeded only by the market leader Tesco, Sainsbury's and Asda in terms of annual revenues.
Morrisons has 19 mostly freehold manufacturing sites and it owns 85 per cent of its nearly 500 stores. British supermarkets have the unique process of making more than half of all the fresh food that it sells.
Brothers Zuber and Mohsin Issa and TDR Capital beat Apollo in buying Asda last year kin the deal that had valued Asda at 6.8 billion pounds.