It’s a done deal: Morrisons to be acquired for £9.5bn

Only two weeks after Britain’s fourth-largest grocer rejected the spontaneous approach from the private equity group Clayton, Dubilier and Rice. The supermarket giant, Morrisons is set to be acquired by a trio of investment groups, including the Softbank owned Fortress along with the Canadian pension fund CPPIB and a unit of Koch industries for £9.5bn. They will pay a 252p share along with backing a 2p special dividend to purchase the popular grocer.  This is a much higher bid in comparison to the 230p-a-share approach from, CD&R.

This is set to be the largest UK private equity buyout since KKR bought Boots in 2007.  Various analysts have expressed some unease following an increase in private equity buyouts as low share prices leave UK companies feeling underrated in the post-Covid-19 and Brexit world. However, similarly to the recent Morrisons acquisition Fortress bought the UK retailer, Majestic Wine’s stores for £95m in 2019.

Morrisons chair, Andrew Higginson said: “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.”

After the evident concern over whether the latest investor would put the long-term interests of the business and its employees first.  As a result, the new owners have made a promise to safeguard pensions for the 111,000 employees and are reportedly ‘full supportive’ of the current pay for all stay to remain at £10 an hour.

We’re excited to see the development of Morrisons in the future, but the real question is… is Sainsbury’s next in line to be acquired by large private equity players?