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U.S. private equity group Clayton, Dubilier & Rice has offered a takeover of supermarket chain Wm Morrison in a deal that would take the fourth British supermarket private, according to two people with direct knowledge of the matter.
One such person said the Morrisons board, which has a market value of £ 4.3 million, was meeting on Saturday to discuss the merits of the approach. The company declined to comment.
CD&R is working with Goldman Sachs on its offering, another person added. A statement clarifying their intentions could be issued later Saturday.
The exact value of an offer could not be known immediately, but Sky News reported that CD&R was weighing an offer for Morrisons that would value the company at around £ 5.5 billion. CD&R and Morrisons declined to comment.
The approach highlights the growing appetite for private capital for British assets and, in particular, for supermarket chains.
Purchasing groups have announced bids for at least 12 companies listed in the UK since the beginning of this year as Brexit and the pandemic weigh on stock prices. It is the fastest pace of private attempts in more than two decades, according to Refinitiv data.
The CD&R approach comes when competition regulators approved a £ 6.8 billion deal this week from the owners of retailer EG Group, billionaire brothers Mohsin and Zuber Issa and private equity firm TDR Capital, for buy the third largest supermarket chain in the UK.
CD&R has Sir Terry Leahy, the former CEO of Tesco, among its advisors. Andrew Higginson, current president of Morrisons, worked alongside Leahy at Tesco for many years. It is also an investor in the EG group’s gas station rival, Motor Fuel Group.
Morrisons ’management team, led by CEO Dave Potts, has tried to reverse the business’s performance since 2015, even establishing alliances with Amazon and Deliveroo.
However, the market has not rewarded them. Shares are now lower than when Potts took over and have fallen 6.3% over the past year, compared to a 11.5% increase in the FTSE 100 index of major companies British in which he was a component until earlier this year, when he was relegated.
Earlier this month, 70 percent of shareholders rejected their salary arrangements.
In late January, the company reported an 8% increase in in-store sales, although total revenue grew just 0.4% to £ 17.5 billion due to fuel sales. abruptly minor.
Covid-related costs affected profits, with a net profit rising 0.5% to £ 96 million. It employs 118,000 people, according to Capital IQ.
Analysts have long speculated that the group could fall to a bidder attracted by its cash generation and, like Asda, third, to a high proportion of privately owned stores.
CD&R has been one of the most active private equity firms in the UK market this year, agreeing to a £ 2.8 billion deal to buy UK-listed medical services group UDG and a £ 308 million deal for Wolseley, the plumbing business.
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