Clayton, Dubilier & Rice (CD&R) has won the auction for Morrisons with a £7 billion bid, paving the way for the U.S. private equity firm to take control of Britain's fourth-biggest supermarket group.
The board of Morrisons recommended CD&R's 287 pence per share bid on Saturday, hours after its bid beat a consortium led by Softbank owned Fortress Investment Group, which had made an offer worth just a penny less per share at 286 pence.
Leahy Set For Return To UK Grocery
CD&R's victory marks a triumphant return to the UK grocery sector for Terry Leahy, the former chief executive of Britain's biggest supermarket chain Tesco, who is a senior adviser to CD&R.
The board recommended that shareholders vote in favour of the 287 pence per share offer at a meeting slated for Oct. 19, saying the private equity group had confirmed its previously stated intentions towards Morrisons remained unchanged.
"Today's final offer from CD&R represents excellent value for shareholders while at the same time protecting the fundamental character of Morrisons for all stakeholders," Morrisons chairman Andrew Higginson said in a statement.
Sainsbury's Shares Rise
Shares in British supermarket group Sainsbury's rose as much as 3.7% on Monday on hopes SoftBank's Fortress Investment, which lost out in the auction, may turn its attention to an even bigger player in UK grocery.
Sainsbury's stock was up 4.2 pence at 288.9 pence at 08:58 GMT, valuing the business at £6.7 billion ($9.1 billion).
Fortress was defeated in Saturday's shootout for Morrisons, Britain's No. 4 supermarket group, bidding 286 pence a share - a penny less than rival Clayton, Dubilier & Rice.
However, managing partner Joshua A Pack signalled Fortress remained interested in UK assets.
'Attractive Investment Environment'
"The UK remains a very attractive investment environment from many perspectives, and we will continue to explore opportunities to help strong management teams grow their businesses and create long-term value," he said in a statement.
A spokesperson for Fortress declined to comment on Sainsbury's, which trails only market leader Tesco in UK grocery sales.
A Sainsbury's spokesperson also declined to comment.
Shares in Sainsbury's are up 28% this year, buoyed by bid speculation.
That started in April when Czech billionaire Daniel Kretinsky raised his stake in Sainsbury's to just under 10% and has been fuelled by the bid battle for Morrisons and signs CEO Simon Roberts's "food first" strategy is starting to work.
Recently, the British supermarket group announced plans to offer lower prices to customers using its digital loyalty scheme and self-scanner service, deepening ties with shoppers and cutting costs in the latest wave of innovation to hit the industry.