Yahoo Finance Morrisons takeover bid raised to £6.7bn by Fortress
A private equity consortium bidding for Morrisons (MRW.L) has raised its takeover offer for the supermarket chain, in response to speculation that a rival bid could be waiting in the wings and dissatisfaction among some shareholders with the current offer.
Fortress Investment Group said on Friday it was raising its bid for Morrisons to 270p per share, plus a special dividend of 2p. The bid values the supermarket group at £6.7bn ($9.3bn).
Fortress approached Morrisons with a 254p-a-share bid at the start of last month, worth £6.3bn. Morrisons' directors voted to approve the deal but shareholders were less impressed.
Silchester International, Morrisons' biggest shareholder, said last week it was "not inclined" to approve the deal. Legal & General, another top 10 investor, said bidders were interested in Morrisons for the "wrong reasons."
Read more: Fortress, Apollo, and CD&R: Inside the private equity firms vying to buy Morrisons
Fortress didn't mention shareholder dissatisfaction in its updated offer but said the increased price reflected speculation that a rival bid could emerge. The Sunday Times reported that rival private equity firm CD&R was preparing a counter offer for Morrisons. CD&R launched a failed £5.5bn takeover offer for the supermarket chain in June. The group has until Monday to return with a fresh bid.
The board of Morrisons said it was in favour of the improved Fortress offer and recommended shareholders approve the deal. A general meeting will be held on 16 August soliciting investor approval.
Shares in Morrisons rose sharply on the news to trade up 2.2% at 277.8p. The rise above the new offer price suggests investors think the bidding war has further to run.
The raised offer price will fuel fears about the future of the supermarket chain. Fortress has vowed not to sell Morrisons' assets but analysts at Bernstein said in a recent note that they failed to see how bidders could make a return on a higher bid unless assets were sold.
Read more: Morrisons takeover: Major investor sounds the alarm on private equity interest
Fortress and its allies said on Friday they would be a "responsible long-term steward of this great British company through the next stage of its evolution."
The takeover bid is being supported by the investment arm of the Canada Pension Plan, Singapore's sovereign wealth fund, and Koch Real Estate Investments. Rival private equity giant Apollo Global (APO) has said it is considering joining the Fortress-led consortium.
Disclosure: Apollo Global Management has agreed a deal to buy Yahoo Finance UK as part of a broader transaction with current owners Verizon. The deal has yet to close.
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