* CD&R wins auction with 287 pence per share bid
* Fortress loses after offering 286 pence per share
* CD&R's previous recommended bid was at 285 pence per share
* Morrisons board due to meet later on Saturday
(Adds background, CD&R and Morrisons decline to comment,
Fortress statement)
By James Davey and Sarah Young
LONDON, Oct 2 (Reuters) - Clayton, Dubilier & Rice (CD&R)
has won the auction for Morrisons with a 7 billion pound
($9.5 billion) bid, paving the way for the U.S. private equity
firm to take control of Britain's fourth-biggest supermarket
group.
The Takeover Panel, which governs M&A deals in the UK and
arranged the auction, said on Saturday CD&R had offered 287
pence a share, while a consortium led by the Softbank
owned Fortress Investment Group offered 286 pence.
CD&R's victory marks a triumphant return to the UK grocery
sector for Terry Leahy, the former chief executive of Britain's
biggest supermarket chain Tesco, who is a senior
adviser to the firm.
The winning bid was only slightly higher than CD&R's 285
pence a share offer that Morrisons' board recommended in August.
The board, due to meet later on Saturday, is expected to
recommend shareholders accept the new offer at a shareholder
meeting slated for Oct. 19.
Morrisons and CD&R had no immediate comment on the outcome
of the auction.
If shareholders approve the offer, CD&R could complete its
takeover of Morrisons by the end of the month, the second UK
supermarket chain in a year to be acquired by private equity
after a buyout of no.3 player Asda completed in February.
EGGS AND BUTTER
Bradford, northern England, based Morrisons started out as
an egg and butter merchant in 1899. It listed its shares in 1967
and is Britain's fourth-largest grocer after Tesco, Sainsbury's
and Asda.
The battle for Morrisons, which has been running since May,
is the most high-profile of a raft of bids for British companies
this year, reflecting private equity's appetite for
cash-generating UK assets.
CD&R has committed to retain Morrisons' Bradford
headquarters and its existing management team led by CEO David
Potts, execute its existing strategy, not sell its freehold
store estate and maintain staff pay rates. The commitments are
not, however, legally binding.
Leahy was CEO of Tesco for 14 years to 2011 and will now be
reunited with Morrisons CEO Potts and Chairman Andrew Higginson,
two of his closest lieutenants at Tesco.
Potts, who joined Tesco as a 16-year-old shelf-stacker, will
make more than 10 million pounds from selling his Morrisons
shares to CD&R. Chief operating officer Trevor Strain will
pocket about 4 million pounds.
Fortress is left to lick it wounds and mull the cost of the
saga. Documents published in July showed that Fortress expected
to incur banking and advisory fees and expenses of 263.5 million
pounds.
In a statement the group said it wished those involved with
Morrisons the best for the future, adding: "The UK remains a
very attractive investment environment from many perspectives,
and we will continue to explore opportunities to help strong
management teams grow their businesses and create long-term
value."
Sainsbury's has in recent months been mooted as another
possible target for private equity and investment companies.
($1 = 0.7383 pounds)
(Reporting by Sarah Young and James Davey; Editing by Kate
Holton and Christina Fincher)
