Morrisons stalker Clayton, Dubilier & Rice could spark bids battle for supermarket ‘in days’
Morrisons suitor Clayton, Dubilier & Rice is expected to ‘clarify’ its intentions for the supermarket as soon as in the next ten days – a move widely expected in the City to be confirmation of a formal £5.5billion approach.
The Mail on Sunday understands there are rival investment firms that will not trigger active engagement until CD&R reveals its intentions. Lone Star, Apollo, KKR and Amazon have all been listed as potentially interested.
Sources said several major private equity firms are monitoring CD&R’s position with a number working ‘very informally and at a very early stage’ on their own potential proposals.
Battle lines: Morrisons suitor Clayton, Dubilier & Rice is expected to ‘clarify’ its intentions for the supermarket as soon as in the next ten days
The company is being advised by former Tesco boss Sir Terry Leahy who is an old colleague of Morrisons chief executive David Potts and chairman Andy Higginson – also previously Tesco executives. If the US giant showed its hand that soon, it would be well before a ‘put up or shut up’ deadline which expires in three weeks’ time. The US giant has said there was no certainty a formal offer would be made. But the market is rife with speculation CD&R could even increase its bid.
One City source said: ‘The assumption at the moment is that this is all about finding the right price to get the board to the table. There are some other big investment firms thinking quite hard on this and waiting to see what Sir Terry and his backers do before then deciding whether to step up their own interest or not.
‘There is a question over whether Terry’s past relationship with the board puts them too far ahead – but I also think people recognise that this is a public company and that the board is committed to giving the best outcome for the business and for its shareholders.’
CD&R and Morrisons declined to comment. CD&R owns the largest independent forecourt operator in the UK, Motor Fuel Group, which provides it with a more comprehensive investment case than potential rivals. It reportedly tried to sell the business for £3billion before the pandemic and may instead seek to merge the two businesses.
That puts it in a similar position to the Issa brothers, owners of petrol forecourts giant EG Group, who recently acquired Asda in a £6.8billion deal against stiff competition.
A buy-out may include the sale and leaseback of some of Morrisons’ property assets to help finance the deal. One City source estimated more than £1billion of property could be considered without damaging Morrisons commercially.