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Morrisons’ biggest shareholder ‘not inclined’ to back £6.3bn takeover deal

Written by on July 27, 2021

Morrisons’ largest shareholder has said it is “not inclined” to back a £6.3bn takeover deal agreed by the supermarket’s board.

Investment firm Silchester, which holds a 15.1% stake in the group, said the board should allow more time for offers to emerge that might better the bid from the consortium led by Fortress Investment Group.

It also said there seemed little in the plans outlined by Morrisons that could not be achieved were it to remain a stock market listed company.

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The intervention comes ahead of a 16 August meeting at which shareholders will be asked to approve the deal.

Silchester said it was “not inclined to support the existing Fortress offer” at the shareholder meeting.

It said the proposed “scheme of arrangement” – the framework under which the takeover would take place – gave “insufficient opportunity for competing bids to emerge”.

Silchester said it encouraged the Morrisons board “to allow more time to respond to other parties who might offer better value to Morrison’s public shareholders”.

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It added: “Furthermore, on the basis of publicly available information, there is little in the recommended offer that could not be achieved by Morrison as a listed company.

“As a listed company, all benefits accrue to public shareholders.”

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Silchester pointed to Morrisons’ advantages such as its direct ownership of many of its store properties, strong brand, and an integrated supply chain unique to the industry.

The intervention marks the latest episode in a battle for the future of Britain’s fourth-biggest supermarket chain.

It began last month when Sky News revealed a £5.5bn approach from US buyout giant Clayton Dubilier & Rice (CD&R) which was swiftly rejected by Morrisons.

Morrisons subsequently agreed a £6.3bn offer from a consortium led by Fortress – owned by Japan’s Softbank – and also including Canada Pension Plan Investment Board and Koch Real Estate Investments.

US private equity giant Apollo then revealed it was also weighing a bid but last week said that it would not make a solo offer, instead entering talks to join the Fortress consortium.

CD&R could still come back with a higher offer, while there has been speculation that Amazon, which has a partnership deal with Morrisons, could also enter the fray.

The takeover talk has prompted concerns from MPs about the potential for new owners selling off property assets or reducing the rights of workers.

But the Fortress-led deal agreed by the Morrisons board includes commitments to the current management team, strategy and its £10 per hour shop floor wage.

Fortress also said it “does not anticipate engaging in any material store sale and leaseback transactions”.

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