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On 6 August 2021, Wm Morrison Supermarkets plc (Morrisons) that it had agreed to an increased £6.7bn offer from the private equity consortium led by Fortress Investment Group LLC (Fortress). The increased offer represents a 7% increase to the £6.3bn offer that was originally proposed in July 2021 (see: ), a 52% premium to the trading price prior to commencement of the offer period and follows from the joinder of Singaporean sovereign wealth fund GIC Private Ltd to the consortium (see: ). Under the new terms, shareholders would receive £2.72 per share, inclusive of a £0.02 dividend.

Fortress’ increased offer had turned up the pressure on US private equity firm Clayton, Dubilier & Rice (CD&R), who originally had until Monday 9 August 2021 to either make a firm offer or withdraw its interest. However, CD&R was given some breathing room, with Morrisons that following a request from CD&R for more time to evaluate its options, and in the interest of its shareholders, it would adjourn the general meeting and court meeting in relation to the Fortress offer from 16 August 2021 to 27 August 2021. On 9 August 2021, the Takeover Panel also to an extension of the ‘put-up-or-shut-up’ deadline to 20 August 2021.

The increased offer comes after a significant level of opposition from institutional investors, including its largest shareholder Silchester (see: ). J O Hambro had previously signalled that only an offer worth at least £2.70 per share was worth merit and consideration, and at £2.72 per share, the increased offer is priced just above the level that may satiate investors. Perhaps in anticipation of CD&R’s next move in the bidding war, Morrisons’ share price has continued to climb, reaching £2.72 on close of business on 6 August 2021 and £2.79 on close of business on announcement of CD&R’s extended deadline. Should the Fortress-led consortium be outbid and require extra funding, we may see the joinder of another party to the offer. US asset manager Apollo Global Management, Inc. had previously its interest in pursuing a sole offer for Morrisons and disclosed that it was in discussions with Fortress about joining the consortium. 

The battle for Morrisons is not the only competition that emerged this week. Vectura Group plc (Vectura), the inhaled medicines developer, had been the target of US private equity firm The Carlyle Group (Carlyle) and tobacco manufacturer Philip Morris International (Philip Morris) in an offer period that commenced in May 2021. Carlyle first the terms of a recommended offer for Vectura at £1.39 per share though was later by Philip Morris with a bid of £1.50 per share. On 6 August 2021, Carlyle struck back, a recommended offer at £1.55 per share that valued Vectura at £958m. Philip Morris rose to the occasion and on 8 August 2021, the terms of a £1.02bn offer valuing the company at £1.65 per share. In response to the activity, the Takeover Panel a rare auction procedure to facilitate the resolution of the competitive bids for Vectura which was due to commence on 10 August 2021. Carlyle however its £1.55 per share bid as final, with no auction commencing. Shareholders are left with the choice of the lower offer from a private equity firm that would provide ‘wider benefits to Vectura and its broader stakeholders’ and a tobacco giant that other stakeholders such as the have criticised for raising ethical conflicts and preventing the furthering of research given the prohibition of papers funded by the tobacco industry in a number of scientific journals. The board will have to choose between which of the two offers to recommend to shareholders. On 9 August 2021, Phillip Morris also the structure of its offer from a scheme of arrangement to a takeover offer, effectively lowering the shareholder support required from 75% to 50%.  

Following from the £6.3bn recommended offer announced from Parker-Hannifin Corporation for Meggitt plc (Meggitt) (see: ), on 12 August 2021, Meggitt that it had received an unsolicited proposal from US aerospace manufacturer TransDigm Group valuing the company at £7.03bn. Though the board reiterated that it continued to unanimously recommend the Parker offer to shareholders, it would also assess the competing proposal against the commitments made by Parker in relation to the UK government and employment. Meggitt’s share price rose to £8.30 on close of business of the announcement, representing a 13% increase to the share price on announcement of the Parker offer.

Market Tracker will continue to monitor these transactions as they develop.