Wm Morrison Supermarkets PLC’s suitor, US private equity group Clayton Dubilier & Rice LLC (CD&R), has been given more time to consider a counter-takeover bid for the supermarket group.
The UK’s Takeover Panel, which regulates takeover activity, yesterday said that CD&R would have until Friday next week to announce a firm intention to make an offer for Morrisons or walk away, a so-called “put-up or shut-up” order, extending yesterday’s deadline.
Morrisons, which on Friday agreed a raised ￡6.7 billion (US$9.3 billion) offer from a consortium led by Softbank Group Corp-owned Fortress Investment Group LLC, had requested that the Takeover Panel set a revised deadline for CD&R.
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On Friday, Morrisons also adjourned from Monday next week to Aug. 27 the shareholder meeting to vote on the Fortress offer.
Fortress has offered ￡2.70 per Morrisons share plus a ￡0.02 a share special dividend and said it “remains committed to becoming the new owner of Morrisons.”
However, shares in Morrisons, Britain’s fourth-biggest grocer after market leader Tesco PLC, Sainsbury’s PLC and Wal-Mart Stores Inc-owned Asda Stores Ltd, closed at ￡2.788 on Friday, indicating investors are hoping for a higher offer.
Analysts have speculated that US giant Amazon.com Inc, which has a partnership deal with Morrisons, could still enter the fray.
CD&R, which has former Tesco chief executive Terry Leahy as a senior adviser, had a ￡2.30 a share proposal worth ￡5.52 billion rejected by Morrisons on June 17.
Morrisons’ board had previously agreed Fortress’ ￡2.54 a share offer worth ￡6.3 billion on July 3, but major Morrisons investors Silchester International Investors LLP, M&G PLC and JO Hambro Capital Management Ltd said it was too low.
JO Hambro said in June that “any offer approaching 270p per share merits engagement and consideration.”
For the Fortress offer to pass it needs the support of shareholders representing at least 75 percent in value of voting investors at the meeting.
The Fortress consortium, which also includes Canada Pension Plan Investment Board, Koch Real Estate Investments LLC and Singapore’s sovereign wealth fund GIC Pte, has given assurances that it would retain Morrisons’ Bradford, England, headquarters and its existing management team led by chief executive David Potts and execute its existing strategy. Material store sale and leaseback transactions are not planned.
However, people with knowledge of the situation have said that CD&R would also be able to tick those boxes to secure a recommendation from Morrisons’ board.
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