Shopping for a Supermarket: Morrisons Board Recommends Takeover Bid from CD&R​

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By Curtley Bale​


The Story

The long-running takeover saga surrounding Morrisons might just be over. The Morrisons board has accepted and recommended a takeover bid from US-based private equity firm Clayton, Dubliner & Rice (CD&R). At a price of 287p per share, this beat the rival offer issued by Softbank’s Fortress Investments by a penny.

The ongoing takeover battle initially began in June 2021 when CD&R issued an unsolicited bid. The City’s Takeover Panel ran an auction last week to decide Morrisons’ future, after neither bidder had made their offer final.

What It Means For Businesses and Law Firms

For Morrisons, the most recent deal is much higher than the original bid from CD&R in June. The original bid was at 230p per share, something which the board felt undervalued the business (BBC). An ensuing bidding war saw Fortress increase its offer to £6.3 billion and £6.7 billion for Morrisons in August, before CD&R’s final bid of £7.1 billion won the auction.

The total deal will be worth £9.8 billion including debts and will see CD&R take over a company with over 120,000 staff and 497 supermarkets (The Guardian). The private equity firm has pledged to keep the company headquarters in Bradford, and to uphold commitments to minimum staff wages and pension pots.

This takeover of the UK’s fourth-largest supermarket follows EG Group’s £6.1 billion acquisition of Asda from Walmart. In this case, CD&R will hope to use its retail experience to help drive Morrisons forward. It will also look to marry Morrisons with one of its other investments; the firm owns the Motor Fuels Group, which has 918 UK fuel courts, whilst Morrisons owns 339 fuel courts (Reuters). By expanding the forecourt convenience store offerings, the two businesses will likely provide synergies for one another. However, this looks set to put Morrisons and CD&R in direct competition with Asda and EG Group and their similar “proposed integration of […] Asda forecourts into EG’s established UK operations” (City AM).

Law Firms Involved: Throughout the bidding process, Morrisons turned to legal adviser Ashurst, whilst CD&R employed the services of Clifford Chance. Clifford Chance will likely have been responsible for managing the timeline of the bid, whilst Ashurst will have advised Morrisons' board on the variety of offers.