US Private Equity Firm Bids $9.65 Billion For UK Grocery Chain Morrisons: What You Need To Know

The British grocery chain WM Morrison Supermarkets ADR MRWSY was one step closer to acquisition from the U.S. private equity firm Clayton, Dubilier & Rice (CD&R) following an auction that ended with a $9.65 billion bid.

What Happened: CD&R outbid Fortress Investment Group, an investment management firm backed by SoftBank Group Corp - ADR SFTBY, in an auction that took place on Saturday.

Morrisons’ board of directors asked shareholders to accept the CD&R offer in a vote scheduled for Oct. 19. Terry Leahy, the former chief executive of the rival supermarket chain Tesco PLC TSCDY, served as a senior adviser to CD&R on the transaction.

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What Else Happened: Morrisons is the U.K.’s fourth-largest supermarket chain. In a BBC interview, Chairman Matthew Higginson defended CD&R acquisition bid.

"Private equity gets a bit of a bad rap sometimes," Higginson said, adding that private equity is "focused on growth and trying to grow businesses — it's the way they make returns and that's very much the case here."

For local consumers, a more pressing issue is whether Morrisons can overcome supply chain problems that have impacted the nation’s stores. Higginson insisted that news coverage of supply chain difficulties was “slightly overblown” and would not affect holiday season shopping, noting the chain has partnerships with 2,700 British farmers who deliver livestock and produce directly to the 17 food processing facilities that supply its 493 stores.

"Supply chains in the U.K. are incredibly efficient and I'm sure we'll be able to deliver a great Christmas for customers as we go through," he said.

Photo: Robert Wade / Wikimedia Commons.