Morrisons supermarket has agreed to a £6.3 billion takeover bid from a group of investment groups.
The deal comes as investment firms look for opportunities in Britain, where the country’s departure from the European Union and the pandemic have weighed on share prices.
Just last month, Morrisons rejected an unsolicited offer of £5.5 billion pounds from US-based Clayton, Dubilier & Rice, saying the bid undervalued the company.On Saturday, the supermarket confirmed a successful offer led by US private equity firm Fortress and involving Canada Pension Plan Investment Board and Koch Real Estate Investments.
The deal will see shareholders receive 252p per share plus a 2p special dividend.
The all cash offer is subject to shareholder approval.
The offer represents a 42% premium on the Morrisons share price before it was announced that the supermarket had rejected the takeover proposal from Clayton, Dubilier & Rice (CD&R).
Fortress has invested in grocery retail in both North America and Europe, and has invested in Majestic Wine in the UK.
Andrew Higginson, chairman of Morrisons, 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.
“It’s clear to us that Fortress has a full understanding and appreciation of the fundamental character of Morrisons.”
Morrisons, which employs about 110,000 people, operates 497 stores and 339 gas stations across the UK. Joshua Pack, managing partner of Fortress, said: “We believe in making long-term investments focused on providing strong management teams with the necessary flexibility and support to execute their strategy in a sustainable and value-enhancing manner.
“We are committed to being good stewards of Morrisons to best serve its stakeholder groups, and the wider British public, for the long term.”
Seema Malhotra, Labour’s shadow minister for business and consumers, said the takeover bid must be closely scrutinised by the government.
“Britain’s supermarkets provide an essential national service and the Covid crisis has highlighted their importance to customers, communities and our retail and farming industries.
“Ministers must urgently work with Morrisons and the consortium to ensure that crucial commitments to protect the workforce and the pension scheme are legally binding, and met."
Richard Lim, chief executive of research consultancy Retail Economics said: “This signals the biggest shakeup in the UK grocery sector for over a decade.
“Success will hinge on the new owners gaining the support of experienced key members of the leadership team to execute on the future strategy.
“This will be critical given the pace of change sweeping through the industry.”
Meanwhile, Unite's representative for Morrisons' warehouse and distribution workers said the union was seeking urgent talks with the supermarket. “We won’t allow another takeover of a strong UK business see the workers trampled over as the boardroom and shareholders rush towards their bonanzas," Adrian Jones said. “Unite will meet urgently with the management team to turn their promises that the workers’ jobs and terms will not be undermined into unbreakable guarantees. “Only with such cast-iron guarantees can there be any hope of Unite and our members cooperating with this sale.”