Morrisons’ fate will be decided in a $ 10 billion shootout on Saturday

LONDON, Oct. 1 (Reuters) – The outcome of a six-month $ 10 billion battle to buy UK supermarket chain Morrisons (MRW.L) will be decided on Saturday at a one-day auction supervised by the Takeover Panel.

The shooting will pit U.S. private equity group Clayton, Dubilier and Rice (CD&R), whose 285 pence share offer was recommended by Morrisons board in August, against a consortium led by Fortress Investment Group, owned by Softbank (9434.T). Read more

CD&R is advised by Terry Leahy, who was CEO of Tesco (TSCO.L) for 14 years until 2011.

Bradford, in the north of England, based in Morrisons, started as an egg and butter merchant in 1899. He listed his shares in 1967 and is Britain’s fourth largest grocer after the market leader Tesco, Sainsbury’s (SBRY.L) and Asda.

The battle for Morrisons is the most high-profile among a series of offers for UK companies this year, reflecting private equity’s appetite for UK cash-generating assets.

The Takeover Panel, which governs mergers and acquisitions transactions in the UK, has moved to an auction process as none of the contenders have declared their bids final.

The competition will have a maximum of five rounds.

In the first round, each contender can increase their offer. If neither does, CD & R’s existing agreed offer wins.

In the event of a higher bid in the first round, the other contender may increase their own bid during the next three rounds.

If there is still no winner, both bidders can make an increased bid in a fifth and final round.

To avoid a draw, any Fortress fifth round bid must be at an “even” number of pence, while CD&R must bid at an “odd” number of pence.

The panel will make a statement on Saturday once the auction is over.

Morrisons has until Tuesday to make its recommendation, but could make a statement as early as Saturday after its post-auction board meeting.

Since the board has already accepted bids from both parties, it is expected to recommend shareholders accept the highest bid at a shareholder meeting scheduled for October 19.

Morrisons shares closed at 295 pence on Thursday, indicating investors expect a higher bid.

CD&R and Fortress are committed to keeping Morrisons head office in Bradford and its existing management team led by CEO David Potts, to execute its strategy, not to sell its wholly owned stores, and to maintain corporate pay rates. staff. However, the commitments are not legally binding.

A win for CD&R would reunite Leahy with Potts and Morrisons chairman Andrew Higginson, two of his closest lieutenants at Tesco.

Potts, who joined Tesco as a 16-year-old stacker, will earn more than £ 10million by selling his Morrisons shares to the winner.

Reporting by James Davey; Editing by Kirsten Donovan

Our Standards: Thomson Reuters Trust Principles.