Apollo in talks to join Fortress-led £6.3bn takeover of Morrisons

(qlmbusinessnews.com via theguardian.com – – Tue, 20th July 2021) London, Uk – –

Move by US private equity firm reduces chance of takeover battle for UK supermarket group

The US private equity firm Apollo Global Management is in talks to join a consortium led by Fortress Investment Group that has agreed a £6.3bn takeover of the British supermarket group Morrisons.

Apollo, which confirmed it was considering a bid for Morrisons earlier this month, said it would no longer be making an offer for the supermarket.

Instead, bosses said they were in early discussions with the rival US private equity firm Fortress to become part of its consortium to buy the grocer.

Apollo’s decision reduces the chance of a takeover battle for Morrisons, given that it had said it was evaluating its own bid.

The offer from Fortress, along with Canada Pension Plan Investment Board and Koch Real Estate Investments, exceeded a £5.52bn unsolicited proposal from Clayton, Dubilier and Rice, which Morrisons rejected in June. Fortress is owned by SoftBank.

Apollo said the discussions “may result in funds managed or advised by Apollo forming part of the investment group led by Fortress for the purposes of the Fortress offer. As a consequence of these discussions, Apollo confirms that it does not intend to make an offer for Morrisons other than as part of the Fortress offer.”

It added: “Apollo notes Fortress’s intentions regarding the Morrisons business and all its stakeholders, as set out in the announcement of the Fortress offer … Should these discussions lead to any transaction, Apollo would be fully supportive of Fortress’s stated intentions regarding Morrisons.”

Politicians in the UK have raised concerns about the takeover and warned that any new owner could strip assets and reduce the rights of workers.

Morrisons owns most of its stores’ freeholds and has a large manufacturing supply chain.

But Fortress has stressed it intends to continue operating with the same management team, did not sell any of its freehold or long leasehold properties after it bought Majestic Wines in 2019, and “does not anticipate engaging in any material store sale and leaseback transactions” at Morrisons.

By Sarah Young