The US$8.7 billion bid battle for Britain’s fourth-largest supermarket group, Wm Morrison Supermarkets PLC, ratcheted up yesterday when a third private equity group, Apollo Global Management Inc, entered the fray.
US group Apollo, which last year missed out on buying Asda Stores Ltd, the No. 3 grocery player in the UK, said it was in the preliminary stages of evaluating a possible offer for Morrisons, but had not approached its board.
Morrisons on Saturday agreed to a takeover led by Softbank Group Corp-owned Fortress Investment Group LLC that valued the firm at ￡6.3 billion (US$8.7 billion).
Photo: Reuters
The offer from Fortress, along with the Canada Pension Plan Investment Board and Koch Real Estate Investments, exceeded a ￡5.52 billion unsolicited proposal from Clayton, Dubilier & Rice LLC (CD&R), which Morrisons rejected on June 19.
However, it was less than the ￡6.5 billion asked for by top 10 Morrisons investor JO Hambro Capital Management Ltd last week.
Analysts have speculated that other private equity groups and Amazon.com Inc, which has a partnership deal with Morrisons, could create a potential bidding war.
Under British takeover rules CD&R has until Saturday next week to come back with a firm offer.
The Panel on Takeovers and Mergers is yet to announce the deadline by which Apollo must clarify its intentions in relation to Morrisons.
The interest in Morrisons underlines the growing appetite from private funds for British supermarket chains, which are seen as attractive because of their cash generation and freehold assets. The funds believe the stock market is not recognizing the grocers’ value in the wake of the COVID-19 pandemic.
Last year, Apollo lost out on buying Asda to the Issa brothers and TDR Capital LLP.
Apollo says its private equity business had more than US$89 billion in assets under management by the end of March, in 150 companies such as Watches of Switzerland, telecommunications, media and technology group Endemol Shine, bookmaker Ladbrokes Coral Group PLC and Norwegian Cruise Line.
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