Morrisons rejects US takeover bid

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Bradford-headquartered supermarket Morrisons has rejected a buyout offer from US private equity firm Clayton, Dubilier & Rice (CD&R).

The Yorkshire supermarket said the offer “significantly undervalues the business”.

The announcement follows news earlier in the day – 19 June – that CD&R confirmed it was considering a possible offer. It has previously made investments in the discount shop chain B&M, from which it made more than £1bn.

Morrisons said it has declined an unsolicited highly conditional cash offer from CD&R of 230p per share, equivalent to more than £5.5bn.

In a statement, the supermarket group said it “unanimously concluded” the bid “significantly undervalued Morrisons and its future prospects”.

Morrisons’ profits dropped 50% as a result of Covid-19 after it repaid £230m worth of Government business rates relief.

However, the supermarket has since predicted two strong years of growth, noting that during the pandemic there has been a “renaissance of the supermarket in Britain” with customers enjoying cooking at home more.

The news of a proposed takeover at Morrisons follows a significant shareholder revolt over the payment of bonuses for its senior management team recently. The issue saw over 70% of shareholders voting against the proposal which included giving chief executive David Potts a maximum £1.7m bonus despite a fall in profits.

Following the announcement by Morrisons that it had rejected the approach, CD&R has confirmed it has 28 days – until 5pm on 17 July – to “either announce a firm intention to make an offer for Morrisons” or  “announce it does not intend to make an offer”.

CD&R noted “there can be no certainty that an offer will be made”.