Battle for Morrisons reaches its dramatic finale: Two private equity titans battling it out in auction to own supermarket group
- Sir Terry Leahy will go head to head with American financier Joshua A Pack in a showdown that will see Morrisons sold for more than £7billion
- Former Tesco boss Leahy, 65, works for US private equity group Clayton, Dubilier & Rice
- Pack, a private equity magnate living in Texas and the founder of Fortress, hopes to come from behind to snatch victory
The battle for Morrisons will reach its dramatic finale today.
Two private equity titans will battle it out in an action to own the supermarket group.
British retail grandee Sir Terry Leahy will go head to head with American financier Joshua A Pack in a showdown that will see Morrisons sold for more than £7billion.
Business royalty: Former Tesco boss Sir Terry Leahy (pictured) works for Clayton, Dubilier & Rice
Former Tesco boss Leahy, 65, works for US private equity group Clayton, Dubilier & Rice, which has had a £7billion bid worth 285p a share already accepted by the Morrisons board.
But in a five-round auction run by the Takeover Panel, 47-yearold Pack, a private equity magnate living in Texas and the founder of Fortress, hopes to come from behind to snatch victory.
A source close to the deal last night predicted the supermarket would be sold for between 295p and 305p a share – or £7.3billion.
That would represent a whopping 68 per cent premium to the company’s share price in June when the bidding war began.
The deal will see Morrisons top brass walk away with mammoth pay cheques, with chief executive David Potts set to earn £20m from the deal if the board decides to honour share awards granted to him under long-term incentive plans.
Leahy is British business royalty, a man who worked his way up from a council estate in Liverpool to run Tesco for 14 years. Pack is a chisel-jawed American go-getter and a father of four. In his 19 years at Fortress he has amassed a huge fortune and this year bought a £17m mansion in Dallas.
The shoot-out is being refereed by the Takeover Panel and starts at 9am. The process could last five rounds if neither side drops out and throws in the towel early. Once the process is over the Takeover Panel will publish the private equity firm’s final offers, followed by Morrison’s board recommending one of them to shareholders as early as Monday.
A vote by shareholders on the bids is set to take place on October 19.
The auction has been hotly anticipated after a summer in which CD&R and Fortress have tussled for the supermarket.
After three months no clear winner emerged and in early September the takeover panel stepped in to end the ‘great uncertainty’ suffered by the business, its employers and suppliers.
The takeover by a private equity firm has sparked fury among business leaders and MPs who are worried Morrisons estate could be asset stripped and sold.
There have also been concerns that any new owner may reduce the supermarket’s tax bill, with off-shore shell companies set up ahead of the takeover.
Morrisons’ pension trustees will have to be consulted, although earlier this month they said an agreement had been reached with CD&R.
Shares in Morrisons were up 0.9 per cent, or 2.5p, at 297p, giving the company a valuation of £7.1billion.
At 9am this morning the battle for Morrisons enters its final stages.
Four different groups will be dotted around the City of London to determine the fate of one of Britain’s oldest firms.
In one corner, at the RBC Capital Markets offices on London Wall, Fortress executive Joshua A Pack and banking adviser Mark Preston will be plotting the first move.
Power couple: Joshua Pack and wife Jacqueline
Over coffee and croissants, they will decide if they want to top the £7bn, 285p a share, offer already tabled by rival bidder CD&R. Should they do so, a five-round bidding war that could last late into the day will be underway.
In another corner, Sir Terry Leahy, the former Tesco chief leading the bid for CD&R, is holed up with Goldman Sachs banker Anthony Gutman.
At the Goldman offices on Fleet Street, they’re on stand by to counter any move by Fortress.
The RBC and Goldman offices have a direct hotline to the Takeover Panel, whose offices sit behind the Bank of England. That is where the b i d s w i l l b e submitted.
Keeping a close eye on proceedings are Morrisons’ top brass David Potts and Andrew Higginson and advisers Rothschild. The auction is set to be tense.
A source said: ‘Gutman and Preston will both have worked out a final offer price, but this is a clash of egos. It’s no different to an art auction – sometimes sensible thinking goes out the window.’