Tuesday 27 July 2021 7:53 pm

Morrisons' biggest shareholder refuses to back £6.3bn Fortress-led takeover bid

Morrisons’ largest shareholder has announced “it is not inclined to support” a £6.3bn takeover bid by a consortium led by SoftBank-owned Fortress.

Silchester International Investors, which owns 15.1 per cent of Morrisons, said in a statement on Tuesday evening that “there is little in the recommended offer that could not be achieved by Morrison as a listed company” and that the deal format meant there was “insufficient opportunity for competing bids to emerge”.

It comes a couple of weeks before Morrisons shareholders are due to vote on the £6.3bn takeover bid from a trio of private investment groups led by Fortress.

The criticism is a significant blow for the consortium and slims their chances of gaining the 75 per cent shareholder backing required for the deal to go ahead.

Fortress’ offer for the British supermarket means Morrisons shareholders will receive 254p a share, comprising 252p in cash and a 2p special dividend per share.

But it could be pushed to increase its offer or risk competition from a rival bidder – following strong hints from Silchester in the statement.

“Silchester encourages Morrisons’ board to allow more time to respond to other parties who might offer better value to Morrisons’ public shareholders,” it added.

Morrisons reached the deal with Fortress at the beginning of July, just two weeks after it rejected an unsolicited offer of 230p-per-share from private equity group Clayton, Dubilier & Rice (CDR).

CDR is understood to be formulating a new bid for the supermarket before its deadline of August 9 to improve its bid or walk away.

The current lead bidding group is headed by Fortress Investment Group, an American investment management company which has ties with Japanese conglomerate SoftBank, and included Canadian pension fund CPPIB and a unit of Koch Industries, KREI.

The total value of the Fortress deal is £9.5bn, with the group valuing Morrison’s equity at £6.3bn and including £3.2bn of net debt under the takeover.

Silchester’s announcement also comes a week after rival bidder Apollo Global Management pulled out of its takeover talks to acquire the supermarket chain.

In a statement published last Tuesday, Apollo said it is in talks to join the Fortress group leading the charge to buy Morrisons.

Shares in the British supermarket chain were up 0.42 per cent at market close on Tuesday.