Morrisons agrees to £6.3bn takeover bid by Fortress-led group

UK supermarket chain Morrisons has agreed to a £6.3 billion takeover offer from a US investment consortium led by Fortress Investment Group.

The news comes after Morrisons rejected a bid from US private equity firm Clayton, Dubilier & Rice (CD&R) for £5.52 billion on 19 June, saying it had “significantly undervalued” the business.

The recent cash offer was proposed by newly formed company Bidco – led by Fortress and joined by Canada Pension Plan Investment Board (CPP Investments) and Koch Real Instate Investment.

Morrisons’ board of directors confirmed on Saturday that it had accepted the offer, however the deal still needs to be put to a shareholder vote. Under the terms of the agreement, shareholders will receive 254p per share.

Nevertheless, the battle for the supermarket continues following multiple reports today that private equity company Apollo Global is considering making an offer.

“The Morrisons directors believe that the offer represents a fair and recommendable price for shareholders which recognises Morrisons’ future prospects,” said Andrew Higginson, chairman of Morrisons.

He added: “It’s clear to us that Fortress has a full understanding and appreciation of the fundamental character of Morrisons. This, together with the very clear intentions they have set out today, has given the Morrisons directors confidence that Fortress will support and accelerate our plans to develop and strengthen Morrisons further.”  

Fortress has previous investment experience in the UK retail and food industry – including its purchase of British wine seller Majestic Wine – and a 19-year record of investing in the grocery industry and petrol forecourt stations in the US including Albertsons, Fresh & Easy and Circle K.

Joshua Pack, managing partner of Fortress, said: “We believe in making long-term investments focused on providing strong management teams with the necessary flexibility and support to execute their strategy in a sustainable and value enhancing manner.

“We fully recognise Morrisons’ rich history and the very important role Morrisons plays for colleagues, customers, members of the Morrisons Pension Schemes, local communities, partner suppliers and farmers.”

Upon completion, Morrisons will continue operating as a standalone business and its head office will remain in Bradford, led by the Morrisons management team.

Fortress says it will support Morrisons in executing its existing strategy which includes new store openings, a focus on its wholesale and online channels capabilities, as well as environmental commitments.

The transaction is expected to be finalised by Q4 2021.