LONDON: US private equity firm Clayton, Dubilier & Rice (CD&R) is considering a possible cash offer for British supermarket group Morrisons, it said yesterday.
CD&R “notes the press speculation regarding a potential transaction involving Morrisons and confirms that it is considering a possible cash offer for the ... share capital of Morrisons,” it said.
It said there was no certainty an offer would be made. Under British takeover rules CD&R has until July 17 to make a formal bid.
CD&R’s statement followed a Sky News report that it had made a preliminary bid approach to the supermarket group’s board that could value Morrisons at £5.5 billion ($7.6bn).
Bradford, northern England-based Morrisons is Britain’s fourth-largest grocer by sales, trailing market leader Tesco, Sainsbury’s and Asda.
Shares in Morrisons, down three per cent over the last year, closed on Friday at 182 pence, valuing the group at £4.33bn.
CD&R’s approach underlines private equity’s growing appetite for UK supermarket assets, attracted by their cash generation and freehold assets.
In February, Zuber and Mohsin Issa and private equity firm TDR Capital purchased a majority stake in Asda from Walmart in a deal valuing the target at £6.8bn.
That deal followed Sainsbury’s failure to take over Asda after an agreed deal was blocked by Britain’s competition regulator in 2019.
Morrisons has a partnership agreement with Amazon and there has been persistent speculation that it could emerge as a possible bidder.
Sky News reported CD&R has approached banks about financing a potential bid for Morrisons in recent days. It said a bid could involve Terry Leahy, the former Tesco CEO who is a senior adviser to CD&R.
When at Tesco, Leahy was the boss of Andrew Higginson and David Potts, who are now Morrisons’ chairman and CEO respectively.
Morrisons, unique among British supermarket groups in making over half of the fresh food it sells, trades from about 500 stores and has a staff of 118,000, making it one of the country’s biggest private sector employers.
In March, the group reported a halving of annual profit due largely to costs incurred during the Covid-19 pandemic, but forecast a bounce back in the 2021-22 year.
&uuid=(email))