Talking Retail Grocery and product news for independent retailers
The supermarket chain Morrisons, which has nearly 500 shops in the UK, accepted a £6.3bn takeover led by US private equity group Fortress Investment Group – the owner of Majestic Wine – over the weekend. The supermarket turned down an offer worth £5.5bn from a US private equity firm in June, saying it “significantly undervalued the business”.
Andrew Higginson, chairman of Morrisons, said of the Fortress deal: “The Morrisons directors believe that the offer represents a fair and recommendable price for shareholders which recognises Morrisons’ future prospects.”
He added: “It’s clear to us that Fortress has a full understanding and appreciation of the fundamental character of Morrisons. This, together with the very clear intentions they have set out today, has given the Morrisons directors confidence that Fortress will support and accelerate our plans to develop and strengthen Morrisons further.”
Joshua A. Pack, managing partner of Fortress, added: “We believe in making long-term investments focused on providing strong management teams with the necessary flexibility and support to execute their strategy in a sustainable and value-enhancing manner. We fully recognise Morrisons’ rich history and the very important role Morrisons plays for colleagues, customers, members of the Morrisons Pension Schemes, local communities, partner suppliers and farmers. We are committed to being good stewards of Morrisons to best serve its stakeholder groups, and the wider British public, for the long term.”
In response to the news, Richard Lim, chief executive of Retail Economics, said: “This signals the biggest shakeup in the UK grocery sector for over a decade. The grocery sector is transitioning through a period of enormous change as the impact of the pandemic has shifted buying behaviour. Navigating the fast-paced change in market dynamics, customer behaviour and the pressures on the food supply chain in a post-Brexit environment will be no easy feat.
“Success will hinge on the new owners gaining the support of experienced key members of the leadership team to execute on the future strategy. This will be critical given the pace of change sweeping through the industry. However, the shift towards online grocery shopping, the growth of rapid delivery and the cross-over with the takeaway market presents lucrative opportunities if the transition of ownership becomes seamless.”
Any takeover deal will be subject to shareholder approval.
Meanwhile, retail trade union Usdaw, which represents Morrisons staff, says it is seeking urgent meetings with the retailer. Joanne McGuinness, Usdaw national officer, said: “We are aware that Morrisons has accepted and is recommending a buyout deal from the global investment manager Fortress and note the assurances for staff. We are now seeking urgent meetings with Morrisons current management and the prospective new owners to ensure that our members’ interests and the long term future of the business are protected throughout this process. In the meantime we are providing our members with the support and advice they need through this period of uncertainty.”
