Supermarket giant Morrisons has agreed a takeover offer from a consortium in a deal worth £6.3bn.
The move follows the rejection of an earlier £5.5bn bid from one of the world’s biggest buyout firms, Clayton Dubilier & Rice (CD&R), which the grocery chain said “significantly undervalued” the business.
Under the terms of the agreed deal with a group made up of Fortress Investment Group, Canada Pension Plan Investment Board and Koch Real Estate Investments, Morrisons shareholders will receive 254 pence a share.
Morrisons is the UK’s fourth-largest supermarket business
Chairman Andrew Higginson said the board believed the offer “represents a fair and recommendable price for shareholders which recognises Morrisons’ future prospects”.
Directors are recommending “unanimously” that shareholders vote in favour of the deal.
Mr Higginson added: “Morrisons is an outstanding business and our performance through the pandemic has further improved our standing and enabled us to enter the discussions with Fortress from a hard-won position of strength.
“We have looked very carefully at Fortress’ approach, their plans for the business and their overall suitability as an owner of a unique British food-maker and shopkeeper with over 110,000 colleagues and an important role in British food production and farming.
“It’s clear to us that Fortress has a full understanding and appreciation of the fundamental character of Morrisons.”
Pointing out all the consortium members had “strong track records and a long-term approach to investing”, Mr Higginson said: “They are backing our strategy, our management and our people.
“Morrisons has a rich history and a special culture and I am convinced that with the long term support of Fortress, the business will continue to prosper in the future.”
Amazon had previously been repeatedly rumoured as a suitor
Joshua A Pack, managing partner at Fortress, said: “We believe in making long-term investments focused on providing strong management teams with the necessary flexibility and support to execute their strategy in a sustainable and value enhancing manner.
“We fully recognise Morrisons’ rich history and the very important role Morrisons plays for colleagues, customers, members of the Morrisons pension schemes, local communities, partner suppliers and farmers.
“We are committed to being good stewards of Morrisons to best serve its stakeholder groups, and the wider British public, for the long term.”
Subscribe to the Daily podcast on Apple Podcasts, Google Podcasts, Spotify, Spreaker
Prior to the latest offer, Amazon has been repeatedly rumoured as a suitor, with Morrisons established as a supplier of food products to the online behemoth’s Prime Now and Pantry customers.
With a workforce of approximately 110,000 people, Morrisons is one of the biggest private sector employers in Britain and has a market share of just over 10%.
It is the UK’s fourth-largest supermarket business, behind the 14.4% share of third-placed Asda.
In its most recent trading update it said sales in the 14 weeks to 9 May had grown 2.7% on a like for like basis, excluding fuel, including a 113% increase in online sales.
Last month, Morrisons was also on the receiving end of one of the biggest shareholder revolts in UK corporate history when 70% of investors voted against its pandemic pay packages.