Global investor in talks to join Morrisons takeover bid
Two weeks after the board of Morrisons accepted an offer for the supermarket and Apollo Global Management announced its was in the preliminary stages of evaluating a possible offer for the Bradford-based business, the PE firm has confirmed it will not be making an offer.
The business, which has previously been linked with the other Yorkshire-headquartered supermarket, Asda, said this morning it is in early discussions with Fortress Investment Group which made the successful £9.5bn offer for Morrisons earlier this month.
These discussions could result in funds managed by Apollo forming part of the investment group led by Fortress to acquire the supermarket.
Apollo noted the intentions of the investors and stated it would be “fully supportive of Fortress’s stated intentions” regarding the supermarket.
The continuing saga of Morrisons comes as Russ Mould, investment director at AJ Bell describes it when interested parties “could see that UK assets were becoming more attractive to overseas investors”.
He noted that: “Private equity firms have been sitting on oodles of cash for a long time, known as dry powder in the industry, and they now look intent on going on a spending spree.”
The market reacted to initial acquisition story, driving the supermarket’s share price up to a five year high of 268.37p per share on 7 July – considerably above 254p bid that had been made by Fortress.
Since then the share value has slowly dropped closing on Monday at 262p per share.
The successful bid came after Morrisons has already rejected a buyout offer from US private equity firm Clayton, Dubilier & Rice (CD&R) this year , after it “significantly undervalued the business”.
It also followed the supermarket making further headlines in June when it suffered one of the biggest shareholder revolts on record over plans to pay bonuses to bosses.
However the interest in the Bradford-based supermarket is testament to the successful turnaround of the business by Andrew Higginson, Morrisons’s chairman and its chief executive David Potts, who took over the supermarket chain in 2015. At the time the business was widely seen to have lost its way and was losing ground to the discount retailers of Aldi and Lidl while failing to make any impact on the middle ground.
Under the stewardship of Higginson and Potts and CFO Trevor Strain, the firm has been transformed with Potts predicting in a trading update in May two strong years of growth.
