Apollo Lines Up Potential Counter Offer For UK Retailer Morrisons

By Steve Wynne-Jones
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Apollo Lines Up Potential Counter Offer For UK Retailer Morrisons

The bidding war for Britain's fourth largest supermarket group, Morrisons, ratcheted up on Monday when a third private equity group, Apollo Global Management, entered the fray.

US-based investment firm Apollo Global Management, which last year missed out on buying Asda, said it was in the preliminary stages of evaluating a possible offer for Morrisons but had not approached its board.

On Saturday, Morrisons agreed to a takeover led by SoftBank owned Fortress Investment Group that valued the firm at £6.3 billion.

The offer from Fortress, along with Canada Pension Plan Investment Board and Koch Real Estate Investments, exceeded a £5.52 billion unsolicited proposal from Clayton, Dubilier & Rice (CD&R), which Morrisons rejected on June 19.

However, it was less than the £6.5 billion asked for by top 10 Morrisons investor JO Hambro last week.


Analysts have speculated that other private equity groups and Amazon, which has a partnership deal with Morrisons, could create a potential bidding war.

Under British takeover rules, CD&R has until July 17 to come back with a firm offer.

Analysts Weigh In On Fortress Offer

Commenting at the weekend, Richard Lim, chief executive of Retail Economics, described Fortress move for Morrisons as signalling "the biggest shakeup in the UK grocery sector for over a decade. The grocery sector is transitioning through a period of enormous change as the impact of the pandemic has shifted buying behaviour. Navigating the fast-paced change in market dynamics, customer behaviour and the pressures on the food supply chain in a post-Brexit environment will be no easy feat.

"Success will hinge on the new owners gaining the support of experienced key members of the leadership team to execute on the future strategy. This will be critical given the pace of change sweeping through the industry."


Elsewhere, Ross Hindle, analyst at Third Bridge, commented that a deal for Morrisons was "always going to come, even after the failed bid by CDR - Morrison shares have been trading flat for the past three years and there has been no real sign of substantial or step-change growth coming".

As he noted, it will be "telling to see how Amazon reacts to the news, they are a key partner to Morrison’s, with much speculation that they might make a bid".

News by Reuters, edited by ESM. For more Retail news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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