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Is a bidding war emerging for Morrisons?
WM Morrisons (MRW) confirmed this morning that it rejected an unsolicited takeover bid from US private equity firm Clayton, Dubilier & Rice (CD&R) of 230 pence per share, giving it a market value of £5.5bn.
The offer was tabled on 14 June at a 29 per cent premium to its last closing price of 178 pence. Morrisons said that CD&R had “significiantly undervalued” the business and its future prospects, and it now has until 17th July to return with an improved bid. But there is already speculation that the offer will spark a bidding war.
Potential contenders include US private equity firms Lone Star and Apollo Global Management. Both firms were in talks to buy Asda from Walmart (US:WMRT) last year, although were eventually beaten out by the billionaire Isaa brothers and private equity firm TDR Capital, who agreed on an enterprise value of £6.8bn. After the inclusion of £3.2bn in net debt, CD&R’s offer pegged Morrisons at a £8.7bn enterprise value.
There is chatter that Amazon (US:AMZN) may enter the fold too, given that it has an established partnership with the grocer. The e-commerce giant has committed to supermarkets as a long-term growth strategy, having bought US chain Whole Foods for $13.4bn in 2017. This year, it opened physical grocery stores in London, which we explored in-person on our Instagram page.
Back in February, Alex Newman suggested that investors take another look at Morrisons’ bull case. Read his full analysis here.
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