A months-long multibillion pound takeover battle for Morrisons will culminate in a one-day auction on Saturday, the UK’s takeover watchdog has confirmed.
The stock market’s Takeover Panel said it would run a bidding process of up to five rounds this weekend because neither of the private equity bidders Clayton, Dubilier & Rice and the Fortress Investment consortium that have been vying for the grocer since June had declared their offers final.
In order to resolve the competition, both bidders have until Saturday to submit a formal increased bid at a fixed price in cash for the first round of the auction. The result will then be announced on Monday.
But if neither party does so, Saturday’s auction process will not go ahead and CD&R’s existing 285 pence per share offer will win.
In what could be a fittingly dramatic showdown on Saturday, the Takeover Panel has ruled that in order to avoid a situation where equal bids are made, if the auction process reaches the fifth and final round, “any increased bid lodged by Fortress must be at an “even” number of pence and any increased bid lodged by CD&R must be at an “odd” number of pence.”
Morrisons’ board must then make a recommendation to its shareholders of one of the two offers by the morning of Tuesday 5th October.
It marks the end of a long, heated battle for the UK’s fourth largest supermarket that began back in June when US private equity group CD&R first made an unsolicited offer of 230 pence per share.
After Morrisons rejected this offer, a trio of private investment groups led by SoftBank-owned Fortress entered the equation with a rival offer of £6.3bn in July.
But shareholders felt this offer was too low, and Fortress made a comeback with an increased offer of £6.7bn in August, which the grocer’s board accepted.
Fortress’ pole position didn’t last long, however, as CD&R returned with a fresh increased bid of £7bn at the end of August, leading to Morrisons’ board withdrawing their support for Fortress and unanimously accepting the original bidder’s.
New York-based firm CD&R is one of the most firmly established investors in the sector and has been advised by former Tesco chief Sir Terry Leahy over the past 10 years.
As it stands, the supermarket’s board is recommending the higher CD&R bid and has called a shareholder meeting for October 19 to approve it.
Both bidders share a deadline of 5pm on Friday to announce that they don’t intend to raise their bid further, in which case Saturday’s auction will be scrapped – a similar scenario to the recent takeover battle for inhaler manufacturer Vectura.