MFG’s private equity owners table £5.5bn bid to take over Morrisons

The US private equity company that owns MFG has made a £5.5bn bid to buy the Morrisons supermarket group.

On June 19 Clayton, Dubilier & Rice (CD&R) issued a statement confirming press speculation that it had made a cash offer for Morrisons.

The Morrisons board responded by rejecting the proposed cash offer of 230p per share saying: “The board of Morrisons evaluated the conditional proposal together with its financial adviser, Rothschild & Co, and unanimously concluded that the conditional proposal significantly undervalued Morrisons and its future prospects. Accordingly, the board rejected the conditional proposal on 17 June.”

Under the Takeover Code CD&R has until July 17 to make an improved offer.

If CD&R does take over Morrisons there has been speculation that it would open convenience stores on MFG’s forecourts, which would have major implications for the forecourt sector.

MFG is currently a major retail partner with Tesco-owned Booker, which supplies hundreds of its Londis and Budgens stores on MFG sites. Whether Booker would wish to carry on working with a company so closely allied to Morrisons must be open to question.

Also, a previous trial partnership between Morrisons and MFG five years ago was quickly abandoned. MFG piloted five Morrisons stores at the end of 2016, but the project only lasted a few months before it was discontinued.

Since then Morrisons has been working closely with other leading forecourt groups such as Rontec, which has more than 60 Morrisons Daily stores across its estate, and MPK.

CD&R’s approach for Morrisons comes after the Issa brothers and their private equity partners TDR – who together own EG Group – received final clearance from the Competition & Markets Authority last week for the £6.8bn takeover of Asda.