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CD&R wins $ 10 billion public sale for Morrisons UK grocery store

© Reuters. FILE PHOTO: A view of a Morrisons supermarket in Birtley, Britain, Aug. 16, 2021. REUTERS / Lee Smith / File Photo

By James Davey and Sarah Young

LONDON (Reuters) – Clayton, Dubilier & Rice (CD&R) won the auction for Morrisons with a bid of £ 7 billion ($ 9.5 billion), paving the way for the US private equity firm to take control of the UK's fourth largest supermarket group.

The takeover body that handles M&A deals in the UK and arranged the auction said Saturday that CD&R offered 287p per share, while a consortium led by Softbank (OTC 🙂 owned by Fortress Investment Group offered 286p.

CD & R's victory marks a triumphant return to the UK food sector for Terry Leahy, former CEO of UK’s largest supermarket chain Tesco (OTC :), who is a senior advisor to the company.

The final bid was only slightly higher than CD & R's offer of 285 pence per share recommended by the Morrisons board of directors in August.

The board of directors, which is due to meet later on Saturday, is expected to recommend that shareholders accept the new offer at a shareholders' meeting scheduled for October 19.

Morrisons and CD&R did not immediately comment on the outcome of the auction.

If shareholders approve the offer, CD&R could complete the acquisition of Morrisons by the end of the month, the second UK supermarket chain in a year, which was acquired by private equity after a buyout of No. 3 Asda completed in February.

EGGS AND BUTTER

Morrisons, based in Bradford, Northern England, started out as an egg and butter trader in 1899. It listed its shares in 1967 and is the UK's fourth largest grocer after Tesco, Sainsbury & # 39; s and Asda.

The Morrisons battle, which began in May, is the most famous of a series of offers for UK businesses this year, reflecting private equity's appetite for UK cash generating assets.

CD&R is committed to maintaining Morrisons' Bradford headquarters and existing management team led by CEO David Potts, executing its existing strategy of not selling its condominiums and maintaining employee salary rates. However, the commitments are not legally binding.

Leahy was CEO of Tesco for 14 years until 2011 and will now be reunited with Morrison's CEO Potts and Chairman Andrew Higginson, two of his closest associates at Tesco.

Potts, who joined Tesco at the age of 16, will make more than £ 10 million selling his Morrisons shares to CD&R. Chief Operating Officer Trevor Strain will pocket about £ 4 million.

The fortress needs to lick its wounds and think about the cost of the saga. Documents released in July indicated that Fortress is expecting banking and advisory fees and expenses of £ 263.5 million.

In a statement, the group said it wished all of Morrisons' stakeholders all the best for the future, adding: “The UK remains a very attractive investment environment from many perspectives and we will continue to look for ways to help strong management teams grow their businesses and create long-term value. "

Sainsbury & # 39; s has been debated as another potential destination for private equity and investment firms over the past few months.

($ 1 = 0.7383 pounds)

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