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The authoritative independent voice of the UK food industry

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Morrisons rejects £5.5bn takeover proposal

21 Jun, 2021

The supermarket chain turned down the unsolicited bid from US private equity firm Clayton, Dubilier & Rice, saying the valuation was too low.

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The supermarket chain turned down the unsolicited bid from US private equity firm Clayton, Dubilier & Rice, saying the valuation was too low.

In a statement, Morrisons said the board had “evaluated the conditional proposal together with its financial adviser, Rothschild & Co, and unanimously concluded that the conditional proposal significantly undervalued Morrisons and its future prospects.”

Morrisons received a “highly conditional” cash offer at 230p per share on June 14 and rejected it three days later. The Financial Times reports that proposal valued Morrisons at a 29% premium to its last closing price of 178p, giving it a market value of £5.5 billion before the inclusion of £3.2 billion of net debt.

UK takeover rules now require Clayton, Dubilier & Rice (CD&R) to announce a firm intention to make a bid by 17th July, or walk away.

Shares in Morrisons have reportedly surged by up to 33% since the news of the proposal broke and shares in other major supermarkets also rose after London markets opened, amid speculation that the entire sector could become the target of private equity interest.

The Labour Party has warned that thousands of jobs at Morrisons could be at risk under private equity ownership. Seema Malhotra, shadow minister for business and consumers, said: “When Debenhams went bust we saw private equity firms walk away while employees lost their jobs and staff who have paid into the pension scheme were left out of pocket. Too often dodgy private equity firms load the companies with debt and leave while pocketing the dividends. This has to end.”

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