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US private equity giant Apollo won’t bid for Morrisons – but could join takeover consortium

Written by on 20/07/2021

A US private equity giant that was weighing up a bid for Morrisons has decided not to make a solo offer for the supermarket.

Apollo Global Management said it was instead now in talks to join a consortium which has already agreed to take over the UK business in a £6.3bn deal.

It is the latest development in what had looked set to become a bidding war for the Bradford-based chain, which is Britain’s fourth-biggest supermarket by market share.

Morrisons three-month share price chart 20/7/21
Image: Morrisons’ share price has been buoyant in the wake of the takeover talk

Shares in Morrisons have been buoyant since takeover talk began last month and were down only slightly on Apollo’s latest announcement.

A £5.5bn approach in June from another US private equity firm, Clayton Dubilier & Rice (CD&R), was first reported by Sky News but swiftly rejected by the supermarket’s board, who said it “significantly undervalued” the business.

But Morrisons subsequently agreed a £6.3bn offer from a consortium led by Fortress Investment Group – owned by Japan’s Softbank – and also including Canada Pension Plan Investment Board and Koch Real Estate Investments.

Apollo then threw its hat into the ring, disclosing that it was in “the preliminary stages of evaluating a possible offer for Morrisons”.

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But it has now confirmed that it is in preliminary talks about joining the Fortress-led consortium.

As a result Apollo “does not intend to make an offer for Morrisons other than as part of the Fortress offer”.

Morrisons is the UK's fourth-largest supermarket chain by market share
Image: Concerns have been raised about what a takeover could mean for the chain’s store property assets

CD&R could still come back with a higher offer, while there has been speculation that Amazon, which has a partnership deal with Morrisons, could also enter the fray.

The takeover talk has prompted concerns from MPs about the potential for new owners selling off property assets or reducing the rights of workers.

But the Fortress-led deal agreed by the Morrisons board includes commitments to the current management team, strategy and its £10 per hour shop floor wage.

Fortress also said it “does not anticipate engaging in any material store sale and leaseback transactions”.

Apollo said it “would be fully supportive of Fortress’s stated intentions regarding Morrisons”.

 Sky News

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