LONDON—The outcome of a six-month $10 billion battle to buy British supermarket chain Morrisons will be decided on Saturday in a one-day auction overseen by a takeover panel.
The shootout will rival US private equity conglomerate Clayton, Dubilier & Rice (CD&R), whose 285 pence share bid was recommended by Morrison’s board in August against a consortium led by SoftBank-owned Fortress Investment Group.
CD&R is being mentored by Terry Leahy, who was Tesco’s CEO for 14 years until 2011.
Based in Bradford, northern England, Morrison started out as an egg and butter merchant in 1899. It listed its shares in 1967 and is the UK’s fourth largest grocer after market leaders Tesco, Sainsbury’s and Asda.
Morrison’s battle is the most high-profile among a raft of bids for British companies this year, reflecting the UK’s appetite for private equity for cash-generating assets.
The takeover panel, which controls M&A deals in the UK, went into the auction process as neither suitor has declared their offers final.
There will be a maximum of five rounds in the competition.
In the first round, any bidder can raise their bid. If it doesn’t, CD&R’s current agreed-upon offer wins.
In the event of the highest bidder in the first round, the second bidder can raise his bid in the subsequent three rounds.
If there is still no winner, both proposers can place an increased bid in the fifth and final round.
To prevent a draw, any fifth round offer by Fortress must be on an “even” number of pence, while CD&R must bid on an “odd” number of pence.
The panel will give a statement on Saturday after the auction is over.
Morrison has until Tuesday to make his recommendation, but he could make a statement by Saturday after a post-auction board meeting.
Given that the Board has previously agreed to the proposals of both parties, it is expected that shareholders will be recommended to accept the highest bid at the shareholder meeting to be held on October 19.
Morrison’s shares closed at 295 pence on Thursday, indicating investors are expecting a higher bid.
Both CD&R and Fortress committed to retaining Morrison’s Bradford headquarters and its current management team led by CEO David Potts, executing their strategy, selling off their freehold store assets, and maintaining employee pay rates. Is. However, the commitments are not legally binding.
A win for CD&R would reunite Leahy with Potts and Morrison chairman Andrew Higginson, two of his closest lieutenants at Tesco.
Potts, who joined Tesco as a 16-year-old shelf-stacker, will earn more than £10 million by selling his Morrison shares to the winner.
by James Dewey
This News Originally From – The Epoch Times