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Morrisons turns down £5.5bn takeover bid from US private equity firm

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NEWCASTLE-UNDER-LYME- NOVEMBER 13: People are seen shopping at supermarket company, Morrisons on November 13, 2020 in Newcastle-Under-Lyme, Staffordshire . (Photo by Nathan Stirk/Getty Images)
Morrisons's board members "unanimously concluded" the offer "significantly undervalued Morrisons and its future prospects" and rejected it on 17 June. Photo: Nathan Stirk/Getty Images

Morrisons (MRW.L) has rejected a £5.5bn ($7.6bn) takeover bid from US private equity giant Clayton Dubilier & Rice (CD&R), saying it "significantly" under valued the firm. 

The Bradford-based company admitted on Saturday evening it had received an "unsolicited" and conditional cash offer from CD&R of 230 pence per share on Monday after Sky News reported the grocer was approached. 

Britain's fourth largest supermarket said in a statement that its board had evaluated CD&R's conditional proposal along with its financial adviser, Rothschild & Co. 

It said Morrisons's board members "unanimously concluded" the offer "significantly undervalued Morrisons and its future prospects" and rejected it on 17 June. 

CD&R has issued a statement confirming a possible cash bid and has until 17 July to announce a firm intention to make an offer under UK takeover rules.

Sales at the FTSE 250 (^FTMC) firm increased by 2.7% in the 14 weeks to 9 May, but the supermarket chain had faced a £27m bill for COVID-related costs in the three months prior.

Read more: Aldi set to open 450 new UK stores

The blockbuster move by CD&R — one of the biggest takeover firms in the world — would have been one of the UK's most high profile bids in the past year.

It follows a flurry of American private equity interest in UK firms.

In February, Zuber and Mohsin Issa and private equity firm TDR Capital purchased a majority stake in Asda from Walmart (WMT) in a deal worth £6.8bn. 

US gambling companies have also been tapping into the expertise of UK rivals in recent months as sports betting has taken off in the US and a rise in online gambling during the COVID pandemic.

In March, jackpot-joy owner Gamesys (GYS.L) agreed a possible takeover by Bally's Corporation (BALY) in a deal valued at more than £2bn.

FTSE 100 (^FTSE) firm and Ladbrokes owner Entain (ENT.L) earlier this year rebuffed an approach from American casino stalwart MGM.

Watch: What are SPACs?

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