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The US private equity group Clayton, Dubillier and Rice WM Morrison have won a four-month long takeover battle worth 9 9.7 billion, including debt in the UK’s fourth-largest supermarket.
The fate of the grocer, which was founded in 1899 and was the company cited since 1967, was sealed in an auction process on Saturday, overseen by the UK acquisition regulator.
The winning bid for 287p shares was 2p shares above CD & R’s existing offer and just one penny above 286p offered by a consortium led by Softbank-owned Fortress Investments. Its bid enter represents an enterprise value of 9.95bn.
Before the CD&R story began, Morrison was paying a cent1 percent premium on its share price, while the total transaction value was 11 of the group’s underlying profits as of January 2021. times multiplication.
Grocery managers are expected to meet later today to decide which proposals to make, although this is essentially a formality. The group’s investors will be asked to approve the deal at a special meeting on October 19.
At least three-quarters of voters must approve the transaction so that it can proceed. Some shareholders expressed concern about the structure and price of the transaction before the process, but have not commented since.
The battle for Morrison began behind the scenes in the spring and came to light in early June, when the company confirmed that it had rejected a 230p share approach from CD&R.
For most of the summer, the castle hand secures a board recommendation for a 254p one-share bid, and then raises it to a 270p off a counterbid.
But CD&R came back in August, offering more shares than expected at 285p and persuading group managers to change their recommendation. It has reached an agreement to strengthen the group’s two defined-benefit pension schemes by transferring additional assets between them.
Entering the takeover panel, reaching an agreement between all parties to end the bidding battle using an auction process conducted up to five rounds a day.
Both bidders pledged to retain the group’s existing management team – many of whom were CEOs of rival Tesco when working with CD & R adviser Sir Terry Leigh – and supported the legacy of the group’s founding son, Sir Ken Morrison, who transformed it into a national player.
But considering how high the bidding has been, analysts believe that bidders need to save significant assets and save costs in order to make a reasonable return on their investment.
The transaction, which, if approved, will be completed by the end of October, marks a time of significant upheaval in the UK’s highly competitive supermarket sector.
Against the backdrop of a global epidemic that has tested their performance to the limit, two out of four large grocers will change hands, a quarter of the market among them.
In February, Asda, the third largest supermarket, was sold to a consortium of TDR Capital and Blackburn-based Isa Brothers.
There is also speculation about the fate of Jay Sinsbury, the second-largest grocer, where both the Qatari investment authority and Czech billionaire Daniel Kretinsky are significant shareholders.
The Morrison Marathon will create a boon for the city’s investment banks, lawyers and public relations advisors; According to bipartisan scheme documents, Morrison will spend about 56 56 million on financial and legal advice, while CD & R’s bill is expected to reach 63 million. The castle is expected to cost 53 53 million.
CD&R will now spend billions of rupees to arrange a multi-billion pound debt package to finance it.