Rival private equity firms are reportedly considering entering a rival bid to Morrisons’ £6.3bn takeover, which was announced yesterday.
The UK supermarket chain’s board accepted a 252p-a-share offer by private equity group Fortress, after an earlier £6bn bid by a different firm was turned down two weeks ago.
The total value of the deal is £9.5bn, with the group valuing Morrisons’ equity at £6.3bn and including £3.2bn of net debt under the takeover.
The accepted takeover bid represents a 42 per cent premium on the company’s 18 June share price, before there was a 230p-a-share bid submitted Clayton, Dubilier & Rice (CD&R).
The Sunday Times reports that rival private equity firms are carefully evaluating Morrisons and considering putting in rival bids in what could spark a bidding war.
Mark Kelly, a managing director at investment manager Cowen, told the Times: “It is likely that Morrisons’ board saw there was a lack of tension in the absence of competition — and therefore once one [private equity] bidder tabled an offer…it is an appropriate tactic to accept this, make it public and hope that a competitive auction then ensues.”
There has been concern recently about the amount of private equity firms swooping in to buy UK firms this year, with the volume of deals at a 40-year high.
Fortress committed to keeping Morrisons’ Bradford HQ open as a part of its takeover bid and has promised to not strip assets and not to materially cut from its 497 physical locations.
Seema Malhotra, Labour’s shadow minister for business, said any deal still needed to be heavily scrutinised by the government.
“Ministers must work with Morrisons and the consortium to ensure that crucial commitments to protect the workforce and the pension scheme are legally binding and met,” she said.
A government spokesperson said: “We are committed to ensuring that the UK remains open for business. It is right that mergers are treated as a commercial matter for the parties involved.”