Morrisons shares rise after rejecting £5.5bn takeover bid
Supermarket chain Morrisons has reportedly seen shares surge by up to 33% since turning down a takeover proposal from private equity firm Clayton, Dubilier & Rice.
Morrisons received a “highly conditional” cash offer at 230p per share on June 14 and rejected it three days later. The Financial Times reports that proposal valued Morrisons at a 29% premium to its last closing price of 178p, giving it a market value of £5.5 billion before the inclusion of £3.2 billion of net debt.
In a statement, Morrisons said the board had “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.”
UK takeover rules now require Clayton, Dubilier & Rice (CD&R) to announce a firm intention to make a bid by 17th July, or walk away.
The Labour Party has warned that thousands of jobs at Morrisons could be at risk under private equity ownership. Seema Malhotra, shadow minister for business and consumers, said: “When Debenhams went bust we saw private equity firms walk away while employees lost their jobs and staff who have paid into the pension scheme were left out of pocket. Too often dodgy private equity firms load the companies with debt and leave while pocketing the dividends. This has to end.”
Morrisons’ shares have reportedly soared by up to 33% since the news broke. Shares in other major supermarkets also rose after London markets opened, amid speculation that the entire sector could become the target of private equity interest.