Morrisons to receive higher offer from Clayton, Dubilier & Rice – report

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Wm Morrison Supermarkets PLC (LSE:MRW) is expected to receive a higher takeover offer from its initial suitor, Clayton, Dubilier & Rice.


The grocer also adjourned the court and general meetings, which will take place on 27 August.


“The Morrisons Directors continue to believe that the Increased Fortress Offer is in the best interests of Morrisons Shareholders taken as a whole and recommend unanimously that Morrisons Shareholders vote in favour of the Scheme at the Court Meeting and the Resolution at the General Meeting,” it said.


READ: Morrisons suitor given more time to make new offer by takeover panel


CD&R, which was given until 20 August to either make a new bid or pull out of talks, started the bidding war with a 230p per share offer in June.


But earlier this month, fellow US private equity giant Fortress raised its proposal to 272p from 252p previously.


CD&R may have to offer at least 275p, although the City is deeming 280p more appropriate.


The grocer’s board and the takeover panel would not have allowed more time to the private equity firm if they did not think it was going to come back with a higher offer, The Times reported.


Since takeover talks started, the FTSE 250 group’s largest investor, Silchester, has been trimming its stake and has made GBP5mln from 1.7mln shares sold at 282p.


CD&R has financing agreements with JP Morgan, Goldman Sachs (NYSE:GS) and BNP Paribas and has to figure out whether upping the stakes will be worthwhile.


It is expected to assure the supermarket chain it will protect jobs and pensions, as well as avoid selling a big chunk of its estate.


The company is already present in Britain with MFG, the leading UK forecourt operator with over 900 locations.


The situation presents many parallels with the recent acquisition of UK grocer Asda by the Issa brothers, owners of forecourt operator EG Group, as there are similar freehold property value extraction and potential synergies in the petrol stations segment.


Shares were flat at 280.24p early on Monday.


–Adds update on court, general meetings–

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