Clayton, Dubilier & Rice bid on Morrisons

US private-equity groups Clayton, Dubilier & Rice have bid to buy supermarket chain Wm Morrisons in a deal to make the UK’s fourth-largest grocery store private, the acquisition group confirmed on Saturday.

CD & R is “considering the possibility of a cash offer,” but it’s unclear if the offer will be made, but said in a statement prompted by Sky News and the Financial Times reports.

They didn’t say how much the offer was worth, but the two close to the deal said they were discussing a bid for CD & R to value Morrisons shares in the range of 225p per share.

It marks a 26% premium against the final closing price of 178p, with a market value of £ 5.4bn before including £ 3.2bn in net debt.

The Morrisons board, which works with Rothschild’s advisers, met on Saturday to discuss the benefits of the approach, said a person familiar with the matter. Although not yet commented, another person who followed the situation closely stated that the leak of interest in CD & R significantly complicated the outlook for the deal.

CD & R is bidding in collaboration with Goldman Sachs, officials added.

Under UK takeover rules, private equity firms must announce their firm intention to bid or withdraw by July 17.

This approach highlights the growing demand for private equity for UK assets, especially supermarket chains.

Buyout Group has announced bids on at least 12 UK-listed companies since the beginning of the year as Brexit and pandemics are squeezing stock prices. According to Refinitiv figures, this is the fastest pace of private take attempts over 20 years.

CD & R is one of the most active private-equity funds in the UK market this year, with a £ 2.8 billion deal to acquire UK-listed healthcare services group UDG and plumbing business Wolseley’s 380,800. We have agreed to trade £ 10,000.

The CD & R approach saw competition regulators this week with gas station retailer EG Group owners, billionaire brothers Mohsin and Zuber Issa, and private-equity fund TDR Capital, the UK’s third-largest supermarket chain Asda. This is due to the closing of a £ 6.8 billion deal to acquire.

CD & R has advised Sir Terry Leahy, former Tesco CEO. The current Morrisons chair, Andrew Higginson, worked with Lehi for many years at Tesco. He is also an investor in the Motor Fuel Group, a rival of the EG Group’s gas stations.

Morrisons management, led by CEO Dave Potts, has attempted to improve business performance since 2015 by improving prices and building a wholesale business that offers convenience stores and gas stations. It was.

But the market is not rewarding them. Equities were lower than they were when Potts acquired them, down 6.3% over the past year. In contrast, the FTSE 100 Index, a component of the UK’s top companies until earlier this year, rose 11.5%. It has been demoted.

Earlier this month, 70% of shareholders was denied The payment arrangement.

Over the year to the end of January, the company reported an 8% increase in same-store sales, but a significant decline in fuel sales resulted in total sales of £ 17.5 billion, up 0.4%.

Covid-related costs impacted profits, with net profit increasing 0.5% to £ 96m. According to Capital IQ, it employs 118,000 staff.

Analysts have long speculated that the group may fall into bidders who are attracted to its cash generation, with a high percentage of freehold stores, like Asda in third place.

There was also speculation that Amazon might acquire the company as a way to enter the UK grocery market on a large scale. Morrisons acts as a supplier to the Amazon Go store, selling food online to Amazon Prime members.

Given that the Sainsbury’s and Asda combination attempt was thwarted by national competition regulators in 2019, it is unlikely that another major UK supermarket group will take action on behalf of the group.

Clayton, Dubilier & Rice bid on Morrisons

Source link Clayton, Dubilier & Rice bid on Morrisons

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