(Alliance News) - Fortress Investment Group LLC hasn't abandoned yet its effort to buy Wm Morrison Supermarkets PLC, after the UK grocer late Thursday accepted a raised offer from rival bidder Clayton, Dubilier & Rice worth GBP7.0 billion.
Shares in Morrisons surged above the 285 pence-per-share offer price, up 4.2% to 291.00 pence in London on Friday morning.
Fortress on Friday asked Morrisons shareholders to take no action on the new CD&R bid, saying it is "considering its options" with respect to the all-cash offer it made at the start of July and increased at the start of August. The Softbank Group Corp-owned private equity firm said it will make a further announcement "in due course".
The new CD&R offer has been unanimously accepted by the board of the Bradford-based grocer, and directors have said shareholders should vote in favour of the takeover at a meeting due in early October. If they do, the deal is expected to complete in the same month.
As a result, Morrisons withdrew its recommendation for investors to accept a previous 272p-per-share takeover bid from a consortium led by Fortress, worth GBP6.7 billion.
Investors had eagerly awaited CD&R's next move, after its first proposal worth GBP5.5 billion was rejected by the supermarket back in July. CD&R was then given until Friday to decide whether to outbid Fortress.
The all-cash offer will be part-funded by loans from Goldman Sachs Group Inc, BNP Paribas SA, Bank of America Corp and Mizuho Financial Group Inc, CD&R said.
The New-York based private equity firm said Morrisons has "differentiated operational strengths", including its freehold property portfolio, wholesale business and partnerships with Ocado Group PLC and Amazon.com Inc.
The firm revealed some of its plans for the supermarket, including a potential commercial partnership with CD&R's Motor Fuel Group, which owns over 900 petrol stations in the UK.
UK lawmakers had warned the Competition & Markets Authority that a new owner could seek to cash in on Morrisons' properties. But CD&R said it "recognises that the high proportion of freehold ownership of the Morrisons store estate is a particular strength of the business" and it "does not intend to engage in any material store sale-and-leaseback transactions".
Morrisons Chair Andrew Higginson said: "The Morrisons board believes that the offer from CD&R represents good value for shareholders while at the same time protecting the fundamental character of Morrisons for all stakeholders...CD&R will be a responsible, thoughtful and careful owner of an important British grocery business."
Terry Leahy, CD&R senior adviser and former chief executive of Tesco PLC, said: "CD&R is delighted to have the opportunity to support the management of Morrisons in executing their strategy to grow and develop the business."
By Ivan Edwards; ivanedwards@alliancenews.com
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