Morrisons Board Supports Sir Terry Leahy’s Acquisition: Former Tesco Chief U.S. Private Equity Fund CD & R Knockes Rivals After £ 660 Million Pension Pledge
- Morrisons board has given the go-ahead for a historic takeover
- Clayton Dubilier & Rice donated £ 7bn to Morrisons during an auction supervised by Takeover Pane officials.
- Bid of £ 2.87 per share exceeded just one pence per share of rivals by private equity firms and groups of billionaires.
The Morrisons board approved the historic acquisition after a knockout bid by a US private equity giant advised by former Tesco boss Sir Terry Leahy.
Leahy’s team has pledged £ 660 million in assets to its pension fund prior to yesterday’s dramatic auction, and it has been documented that it has slackened the deal.
Clayton Dubilier & Rice ended the 15-week battle for control yesterday afternoon with a £ 7bn bid offer to Morrisons at a takeover panel-supervised auction.
Gosign: Shareholders will have final decision later this month, but are unlikely to block offers
Bid of £ 2.87 per share exceeded just one pence per share of rivals by private equity firms and groups of billionaires. Two-thirds of the purchase is expected to be covered by debt, which is about twice the amount Morrisons currently owes.
Inviting a bid last night, Morrisons Chairman Andy Higginson said:
“CD & R has a strong retail experience and a strong track record of developing and growing the businesses in which we invest, and we share our vision and ambitions for Morrisons. CD & R is a key food product in the UK. We are confident that we will be the responsible, thoughtful and discreet owner of our business.
Shareholders will have final decision later this month, but it is unlikely that the stock will block the highest-priced offer it has reached in nearly a decade. CD & R agrees to deal with Morrisons pension fund secured against Morrisons assets after trustees have expressed concern that debt transactions will “substantially weaken” the long-term financial position of the pension scheme bottom.
It followed a secret meeting between CD & R and pension fund trustees last month, and since then spectacular numbers have been published in bidding-related documents. It also guarantees that the fiduciary will regularly renew the financial position of the supermarket and the strength of the contract offered by the chain under the new owner.
CD & R outperforms a consortium of investors backed by Japanese tech tycoon Masayoshi Son and US real estate billionaire Charles Koch. The mood of the Goldman Sachs top-floor office, where Lee Hee and CD & R top brass made the base for the day, was said to be “delight” yesterday afternoon.
The sale marks the end of 54 years on the London Stock Exchange, where supermarket shares have been traded since it was listed by Sir Ken Morrison, the Patriarch of the company that took over in 1952.
Founded in 1899 by his father as an egg and butter stall at Lawson Market in Bradford.
CD & R provides the Takeover Panel with a number of guarantees to help close the deal, including maintaining the Bradford headquarters. Despite concerns that private equity buyers could plunder the chain’s assets (equivalent to £ 5.8bn), CD & R said Morrisons’ free stakes have been and will continue to be the foundation for many years. Claims to be a special strength of the business. Of Morrisons.
In August, he said, “I have no intention of selling material stores or conducting leaseback transactions.” It cited other investments, including a huge motor fuel group that said it maintained “high levels of real estate ownership.”
But senior retailers said last night that the sale of some real estate for development or leaseback was “unavoidable.” One conference room-level retailer said: “There are several ways to get value out of real estate. Private equity is an esoteric art.” MoS said five city sources said £ 1 billion for investors to make a typical profit on a private equity basis. It estimates that it will need to sell £ 1.5 billion in assets.
But CD & R said it plans to open more stores, grow the supermarket’s online business, and sell more to wholesale customers, including convenience stores. The warranty given in the statement is valid for one year, but city sources said that if Morrisons were to be defeated, they would likely be held “morally” liable.
MoS revealed in July that CD & R was involved in a decade-long court battle over allegations that it “stolen assets and put another US company on the brink of bankruptcy.” The company strongly refutes that claim. Also, CD & R tax arrangements may be scrutinized after lining up in Grand Cayman tax havens to run a supermarket giant.
Morrisons Board Supports Sir Terry Rayfie’s Acquisition
https://www.dailymail.co.uk/money/markets/article-10052095/Morrisons-board-backs-Sir-Terry-Leahy-takeover.html?ns_mchannel=rss&ns_campaign=1490&ito=1490 Morrisons Board Supports Sir Terry Rayfie’s Acquisition