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Morrisons rejects £5.5bn offer from US private equity firm

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Morrisons is the fourth largest chain of supermarkets in the UK. It has recently rejected a £5.5 billion takeover proposal from US private equity firm Clayton, Dubilier & Rice.

The supermarket chain with 118,000 staff members said that the offer “significantly undervalues” the firm.

Sir Terry Leahy, the CD&R’s advisor confirmed that the firm was considering a formal bid about its plans, after weekend media speculation.

Even beforehand the company made investments in the discount shop chain B&M, from which it made more than £1bn.

 

In a statement, Morrisons said it had –

 “evaluated the conditional proposal together with its financial adviser, Rothschild & Co, and unanimously concluded that the conditional proposal significantly undervalued Morrisons and its future prospects”.

 

The proposal offered by CD&R was worth 230 pence a share. It does not create a formal offer, and under UK takeover rules it has until 17 July to announce a firm intention to bid or walk away.

CD&R is one of the biggest turnover firms in the world. And this move, would have been one of the most high profile of many bids for UK companies, last year.

The company also agreed to a £2.8bn takeover of UK healthcare group UDG, and a £308m bid for the plumbing group Wolseley, this year.

Morrisons – with its 500-store property portfolio, most of which it owns completely – and its 10% of the grocery market – is an striking proposition.

Various speculations regarding the bids about Morrisons has been made by Amazon.

 

As per the information provided by the Financial Times CD&R’s intentions in the beginning were to approach the Morrisons on June 14.

In addition to the cash offer, CD&R would take on Morrisons’ £3.2bn of debt, taking the total value of any deal to almost £9bn.

A formal bid from CD&R could involve Mr Leahy who is now Morrisons’ chairman and chief executive respectively.

Morrison’s sales had increased by 2.7% in the 14 weeks to 9 May, in the previous month. But it had faced a £27m bill for Covid-related costs in the past.

Earlier this month, Morrisons was reproached by investors over executive pay, with more than 70% of votes cast at its annual shareholders’ meeting rejecting its pay report.

 

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