Takeover of supermarket Morrisons backed by two influential shareholder advisers
The takeover of Morrisons has been backed by two influential shareholder advisers.
Glass Lewis and its rival Institutional Shareholder Services, ISS, have circulated advice to major institutional investors recommending they vote in favour of the takeover by a group of foreign investors led by private equity firm Fortress.
Updated recommendations from both advisers are expected to be delivered early next week following the increased offer from Fortress on Friday. The endorsement will be welcomed by the board and the Fortress consortium after widespread shareholder disapproval.
Driving a deal: Shareholders had rounded on the decision to sell at the initial price of £2.54 a share
Shareholders had rounded on the decision to sell at the initial price of £2.54 a share. JO Hambro called on suitors to pay £2.70 while M&G said the offer price did not reflect ‘the true value’ of the company.
Its largest shareholder Silchester – with a 15 per cent stake – said last month it was ‘not inclined to support’ the deal.
At the current price, Silchester stands to make more than £200million on its investment.
Fortress increased its bid by £400million to £6.7billion on Friday – £2.72 a share – amid speculation that a rival outfit led by former Tesco chief Sir Terry Leahy may have been about to gazump its bid.
It is understood Clayton Dubilier & Rice, whose initial offer was rejected by the board in June, had been close to making a bid on Friday morning but delays in the process allowed Fortress the opportunity to take the unusual step of raising its own offer in anticipation.
CD&R has asked the Takeover Panel for more time to work on a possible offer, which is likely to result in a delay to its original deadline of 5pm tomorrow. Sources suggested its new deadline would be August 20.
Morrisons has put back the date of the shareholder vote to August 27 in anticipation of the change.
CD&R must show the Panel it is committed to working on a credible bid while also seeking approval from its own investment committee in the US.
The raised offer is likely to see off the worst of shareholder opposition, putting the London Stock Exchange-listed grocer into private hands for the first time in 54 years.
The Fortress consortium includes the private equity giant, which owns Majestic Wine and is backed by billionaire Masayoshi Son’s Softbank; CPPIB Credit Investments, a subsidiary of the Canada Pension Plan Investment Board; and Koch Real Estate Investments.