Private equity's supermarket sweep

The private-equity battle for Wm Morrison is intensifying now that it has accepted a bid from Fortress Investment. Matthew Partridge reports

Morrisons' workers
Fortress has promised industry-beating pay rates for staff
(Image credit: © PA Images / Alamy)

“You wait ages for a bidder to emerge for one of the UK’s big supermarket chains, then three turn up at once”, says Dominic O’Connell on the BBC. Having recently turned down a takeover offer from US private-equity firm Clayton, Dubillier & Rice (CDR), Wm Morrison has just “wrong-footed” the market by announcing a deal with a group of investors led by Fortress Investment. At 254p a share it represents a 42% premium to the supermarket’s pre-bid share price. And a third private-equity group, Apollo, is “considering its own offer”.

The Fortress bid is certainly convenient for Wm Morrison’s board, say Nils Pratley in The Guardian. Not only did it get a better offer than CDR’s, but it also gives it the opportunity to claim the moral high ground by selling to an owner they claim has a “long-term approach to investing”. But Fortress is “not running a charity”, while its commitments to good behaviour, including “industry-beating pay rates for staff”, are “statements of intention” rather than legally binding “post-offer undertakings”.

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Dr Matthew Partridge
Shares editor, MoneyWeek

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri