Former Tesco boss Sir Terry Leahy and his US private equity backers are to be handed control of Morrisons after winning a dramatic £7billion poker game yesterday.
A successful bid for the store – which began in 1899 as an egg and butter stall in a Bradford market – follows a four-month battle for the chain between some of the world’s most powerful business moguls.
It ended in a secretive auction with Sir Terry and his private equity paymasters Clayton Dubilier & Rice (CD&R) trumping a rival group of investment giants and billionaires by just one penny a share.
At times, it seemed the build-up to the high-stakes deal could have been penned by writers of US TV show Billions, which portrays the often brutal world of high finance.
At 8am yesterday, Sir Terry and his partners set up their base at the City of London offices of the investment bank Goldman Sachs for the final round of the fight for Morrisons.
In expectation of a drawn-out endgame, caterers had supplied food and drinks for the ‘war room’ on the top floor.
Private equity giant Clayton, Dubilier & Rice (CD&R) has won the battle to buy supermarket giant Morrisons, bringing an end to a dramatic four-month takeover saga
But in the event the highly anticipated auction was over in time for the winning bankers to head off for lunchtime drinks.
Sir Terry made the winning bid of £2.87 a share flanked by Goldman Sachs executives, advisers from the law firm Clifford Chance and CD&R partners.
They were in regular contact with CD&R chairman Don Gogel, regarded as one of the most powerful men in finance.
A seven-minute taxi ride away at the offices of top law firm Slaughter and May, Josh Pack, managing director of rival private equity firm Fortress, had teamed up with investors including US property magnate Charles Koch. Their efforts, which cost the companies tens of millions of pounds, proved futile.
The secret bids reached only the second round yesterday morning before Fortress threw in the towel.
Officials at the Takeover Panel, the regulatory body that oversaw the auction, released news of the final bids at 12.12pm. It marks the end of Morrisons’ 54-year stint on the London Stock Exchange.
The sale price – 61 per cent higher than four months ago, before the bidders emerged – highlights the lengths to which private equity firms will go to get their hands on British businesses.
CD&R’s £7billion takeover, which will rise to nearly £10billion once debt is taken into account, has been given the green light by the Morrisons board.
A successful bid for the store follows a four-month battle for the chain between some of the world’s most powerful business moguls (stock image)
Its chairman, Andy Higginson, recommended Sir Terry’s offer last night, paving the way for a shareholder vote later this month.
Mr Higginson said: ‘CD&R have good retail experience, a strong record of developing the businesses in which they invest, and they share our vision for Morrisons.’
Sir Terry said: ‘We are gratified by the recommendation of the Morrisons board and look forward to the shareholder vote to approve the transaction. Morrisons is an excellent business with a strong management team, a clear strategy and good prospects.’
Highlighting the appeal of British firms to foreign buyers, Mr Pack said: ‘The UK remains a very attractive investment environment.’
The Morrison family still has a 5 per cent stake in the company.
It is impossible to know what Sir Ken Morrison, who died in 2017, would think of a private equity owner of the British supermarket, particularly given the reputation of such firms for using high levels of debt to buy companies and then pursue profits aggressively.
But CD&R has made a series of assurances, including keeping the Morrisons head office in Bradford.
Sir Ken inherited the firm in 1952 from his father, who originally set up a stall in Rawson Market, Bradford.
He floated it on the stock market in 1967 and built it to become Britain’s fourth largest chain.
The price tag is just 2p a share more than the formal offer Sir Terry’s team made in August to the board, but is higher than Morrisons shares have been for a decade.
Source: Daily Mail UK