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On 2 October 2021, US private equity firm Clayton Dubilier & Rice (CD&R) supreme over the consortium led by Fortress Investment Group LLLC (Fortress) with its £7.1bn for Morrisons at £2.87 per share. This is not CD&R’s first foray into the retail sector, having previously owned discount retailer B&M European Value Retail S.A. (B&M), turning around a £1.5bn profit following the company’s IPO in 2014. Sir Terry Leahy, senior adviser to CD&R, chaired B&M and it is rumoured that the former Tesco CEO will also be appointed chairman for Morrisons.

Going into the auction, CD&R had been the party to beat, with its £7bn at £2.85 per share (see: ). Fortress made an offer that represented a 1p per share increase to CD&R, bidding at £2.86 per share though was ultimately defeated with no counter to CD&R’s £7.1bn bid. CD&R’s bid represents a 61% premium to the trading price of Morrisons on 18 June 2021 (ie one day prior to CD&R’s first attempt to court Morrisons with a £5.5bn ). Anticipation of the auction left Morrisons’ shares closing at £2.97 on 1 October 2021 and since the auction’s conclusion, shares have finally stopped trading above offer price, closing at £2.85 on 7 October 2021.

The shareholder meetings required to implement CD&R’s offer have been for 19 October 2021. The scheme is expected to be effective of 27 October 2021, with Morrisons’ shares delisted from the London Stock Exchange on 28 October 2021. The shareholder meetings that were due to be held to approve the Fortress offer have been until further notice.

Whilst Fortress may have been the loser this time, it begs the question as to whether Fortress will continue to pursue UK supermarket assets again. Shares in J Sainsbury plc and Tesco plc received a small uplift in trading, with a 3.4% and 1.5% increase upon news of the results of the auction.

Marker Tracker will continue to monitor these transactions as they develop. See our upcoming Public M&A Q3 2021 update for further analysis on the trends seen in this quarter.