Shares in Morrisons rocket by 11 per cent as bidding war looms

Shares in Morrisons soared by 11 per cent after the prospect of a bidding war for the Bradford-based grocer opened up.

The boost in the value of Morrisons stock saw its share price hit the 267p mark after another private equity company said it is eyeing a takeover move, despite its board having already agreed to a £6.3 billion deal with Softbank-owned Fortress Investment Group.

New York-based investment giant Apollo Global Management said on Monday it is considering launching its own bid, saying it was “in the preliminary stages of evaluating a possible offer for Morrisons” on behalf of investment firms managed by Apollo.

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While it added that no formal approach has yet been made to the Morrisons board, it fuel speculation that other suitors may step forward to gain control of Britain’s fourth largest supermarket, which employs more than 100,000 people.

Morrisons is now the subject of three bids for a takeover.
Morrisons is now the subject of three bids for a takeover.

In a statement on Monday, Apollo added: “There can be no certainty that any offer will be made, nor as to the terms on which any such offer might be made.”

It is understood that Apollo hired investment bank Morgan Stanley to advise over any potential offer.

The interest from Apollo comes two days after Morrisons told investors it had agreed the offer, led by Fortress which has partnered with Canada Pension Plan Investment Board and Koch Real Estate Investments.

The deal will see shareholders receive 252p per share plus a 2p special dividend.

CEO David Potts

The consortium has made assurances to protect worker pay and the legacy of Sir Ken Morrison, who took the business from a small Bradford-based retailer to a muliti-billion pound business. It has also pledged not to restructure the management of Morrisons or relocate its headquarters away from Yorkshire.

However unions and opposition MPs have called for greater scrutiny of the deal.

The agreement came almost two weeks after private equity firm Clayton, Dubilier & Rice (CD&R) made an approach last month.

Analysts said that the Fortress deal appeared to have the best prospects of success.

Andrew Gwynn, an equity analyst at the financial firm Exane, said: “Fortress doesn’t seem to be proposing any aggressive change, with a focus on simply empowering the management team to deliver on their longer-term strategy.

“The deal is conditional on 75 per cent approval from shareholders. We think that should be achievable at this price range.

“The deal is very likely to succeed.”

Meanwhile Richard Hunter, head of markets at Interactive Investor, commented “As an investment destination, the UK is attracting increased interest from overseas and the latest twist in the Morrisons bidding war has upped the ante.”