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Morrisons investors to vote on £7bn private equity takeover

Morrisons investors expected to rubber-stamp supermarket’s £7bn private equity takeover


Morrisons investors face a crunch vote today, which is expected to see the 122-year-old supermarket sold to a US private equity giant for £7billion.

Clayton, Dubilier & Rice (CD&R) edged out rival Fortress with a bid of 287p per share, taking the price to its highest level since 2013.

Investors are expected to wave the deal through despite cries of outrage from Westminster, the City and the farming community.

Investors are expected to wave through Morrisons £7bn takeover by Clayton, Dubilier & Rice  despite cries of outrage from Westminster, the City and the farming community

The company needs 75 per cent support for the CD&R deal to go through.  Some shareholders, including the largest Silchester, had raised concerns about the deal earlier in the bidding war, but opposition has dropped away as the share price has risen.

CD&R has been keen to stress that it will want to uphold the supermarket’s values and has attempted to ward off suggestions it will sell the company’s freeholds.

But tax experts have raised a red flag over private equity buyers using debt to finance transactions, saying the structure means the UK taxpayer will effectively ‘subsidise’ the deal.

The sale will return focus to the supermarket’s trading performance. In its most recent update Morrisons said it will beat its £430million profit target this year, despite a slip in sales. 

It reported a drop in sales of 0.3 per cent, excluding fuel, in the six months to August 1, compared with 2020.

Profit before tax fell 43.4 per cent to £82million, which it blamed on lost sales in its cafes and of hot takeaway food.

  • The billionaire Issa brothers’ EG Group has pulled out of a £750million deal to buy Asda’s petrol forecourts – loading another £500million of debt on to the supermarket they bought last year. Asda will be forced to give up £250million of its cash reserves and add an extra £500million of debt to its balance sheet to fill the hole in the purchase price.

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