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Morrisons faces petrol station probe ahead of £7bn takeover deal vote

Morrisons facing petrol station probe amid fears drivers will lose out at the pumps as shareholders prepare to vote on £7bn takeover deal


Regulators are poring over the proposed £7billion takeover of Morrisons by a US private equity giant over concerns about the number of petrol stations the group would own.

Officials at the Competition and Markets Authority are monitoring the situation after Clayton, Dubilier & Rice beat rival Fortress in a bidding war over the weekend.

In a rare auction that gripped the City, CD&R tabled a winning bid of 287p a share, which valued the supermarket at £7billion and topped the Fortress offer of 286p. 

Fruitful: Morrisons chief executive David Potts could make £22m from the proposed £7bn takeover by Clayton, Dubilier and Rice

Shares fell 3.7 per cent, or 11.1p, to 285.9p yesterday after the bidding war failed to push the price as high as investors hoped.

Regulators want to assess whether the tie-up will spell bad news for UK drivers and consumers and City sources said they are on alert to potentially launch a full-scale investigation. 

CD&R owns Motor Fuel Group (MFP), the UK’s largest petrol station retailer. It bought MFP for £500million in 2015 and has 900 stations, more than Shell, Euro Garages and BP.

Morrisons has around 335, giving combined control of more than 1,200 forecourts. There are roughly 8,000 petrol stations operating in the UK.

Morrisons shareholders are set to vote on the CD&R offer at a meeting on October 19 and early indications are that the deal will be given the green light.

Fund manager Columbia Threadneedle has said it will back the takeover, while M&G is also set to vote in favour.

But a CMA investigation would slow the completion.

A source close to the deal said: ‘If CD&R plans to sell Morrisons food through Motor Fuel Group then the CMA will have to take a look. If they keep them separate then there is a case for giving CD&R the green light.’

Similar concerns were raised when the Issa brothers bought Asda for £6.8billion.

The Issas own EG Group, which has almost 400 petrol stations while Asda has 323.

In June, regulators forced them to sell 27 petrol stations to get the deal across the line. Morrisons and Asda, with their new private equity owners, are preparing to fight it out and increase their UK market share.

Morrisons is the UK’s fourth-largest supermarket with 10 per cent of the market, while Asda is third with 15 per cent. Sainsbury’s is second with 16 per cent, some way behind Tesco’s which dominates with 27 per cent.

The battle between Morrisons and Asda will pitch Sir Terry Leahy against Sir Stuart Rose, with the two retail grandees set to become chairman at the respective supermarkets. 

Leahy has an excellent track record, having turned Tesco into Britain’s biggest grocer. He was also the architect of the Tesco Clubcard scheme, the first of its kind.

Neil Wilson analyst at Markets said: ‘It’s going to be a fascinating battle.

‘Who’d have thought the two of them would be back on the front line after all these years.’ But concerns remain that Morrisons and Asda estates could be pillaged and sold off on the cheap in order to achieve the returns that private equity owners crave.

The current Morrisons chairman Andy Higginson tried to allay those fears. He said: ‘Private equity gets a bit of a bad rap sometimes. 

Private equity is focused on growth and trying to grow businesses – it’s the way they make returns and that’s very much the case here.’

Morrisons was founded by William Morrison in Bradford in 1899, where the business still has its headquarters. It was run for 50 years by the founders son, Sir Ken Morrison, who died in 2017.

The group has almost 500 shops and more than 110,000 staff.

Morrisons bosses could share up to £39million from the deal. Chief executive David Potts, 64, could make as much as £22million. He has been at the helm of the company since 2015.

The amount he and his colleagues will make depends on whether shares he has been allocated under long-term bonus plans – which is linked to performance – are paid out.

Morrisons’ finance boss Michael Gleeson could make about £4million and operations boss Trevor Strain a bumper £13million.

Read more at DailyMail.co.uk