Morrisons potential bidder won't go solo, in talks to join rival bid group

By

Sandra Halliday

Published
Jul 20, 2021

The prospects of an all-out bidding war for UK supermarkets giant Morrisons have receded with news that one of the private equity groups that was interested in it won’t be making a bid on its own.

Morrisons operates one of the ‘big four’ UK supermarket chains, has supply deals with Amazon and also makes the growing Nutmeg clothing range.

US-based Apollo Global Management has said it’s not making a solo bid but it’s in talks to join the Fortress Investment Group-led consortium. That group had already made a  £6.3 billion ($8.6 billion) offer that the Morrisons board has backed.

Apollo’s move makes the takeover even more likely and would mean that two of the UK's four largest supermarket chains would be owned by private equity groups, following the recent takeover of Asda. The two largest chains – Tesco and Sainsbury's – remain stock exchange-listed businesses.

Apollo, which has also invested in ambitious watches and jewellery retailer Watches of Switzerland, had said it was evaluating a potential bid earlier this month.

Morrisons shares fell slightly on Tuesday after news that it wouldn't make a solo bid was released. That leaves Clayton, Dubilier & Rice (which had approached the supermarket chain with a quickly-rejected offer in June) as the only other known potential rival bidder. But there has been speculation that Amazon could enter the race, although the American online retail giant has said nothing so far.

Given the likelihood that Morrison's will be taken over, there remain huge concerns about jobs at the chain and UK politicians have also said they're worried that another of the major food suppliers in the country would fall into private equity hands.

Fortress has made plenty of positive noises in an effort to allay these fears. It said it would retain the current management team (which has been responsible for deepening the Morrisons dive into the clothing sector), keep its existing strategy and head office and won't sell off its valuable freehold stores in order to make a quick profit.