US fund wins bidding war for Morrisons

Venture capital fund Clayton, Dubilier & Rice (CD&R) has narrowly won the battle for supermarket chain Morrisons last weekend, with a bid of 7.1 billion pounds (8.3 billion euros).


Difference of one pence per share

In the auction that took place last Saturday, CD&R eventually offered 287 pence per share for the UK's fourth largest supermarket chain, just one pence per share more than rival Fortress Investment Group. Morrisons' shareholders must now give their final verdict on the deal, which will happen on 19 October.


The battle for Morrisons started in June this year, with an unexpected bid of 5.5 billion pounds (6.4 billion euros) by CD&R. This was soon followed by a counter-offer from the American investment fund Fortress, which offered 6.3 billion pounds (7.4 billion euros). In the end, it was decided to settle the takeover battle through a rarely used auction process.


Interesting target

Morrisons is considered an interesting acquisition target, because it still owns most of its real estate. The supermarket chain also operates an integrated business model with its own production facilities and even its own fishing fleet. These are elements that the acquirer could sell to finance the takeover. Moreover, Morrisons has a partnership with Amazon.


The takeover of Morrisons by CD&R may also mean the return of a familiar name to the British food retail world: Terry Leahy, who was CEO of market leader Tesco for many years, is a senior advisor at CD&R and is now tipped as chairman at the British number four.


It is not the only supermarket chain that is in the sights of investors: speculation about the future of Sainsbury's is also rife. The share price rose sharply after the Morrisons deal was announced and one of the candidates for takeover could be... Fortress.