Morrisons turns down £5.5bn takeover bid from US private equity firm

Morrisons (MRW.L) has rejected a £5.5bn ($7.6bn) takeover bid from US private equity giant Clayton Dubilier & Rice (CD&R), saying it "significantly" under valued the firm.

The Bradford-based company admitted on Saturday evening it had received an "unsolicited" and conditional cash offer from CD&R of 230 pence per share on Monday after Sky News reported the grocer was approached.

Britain's fourth largest supermarket said in a statement that its board had evaluated CD&R's conditional proposal along with its financial adviser, Rothschild & Co.

It said Morrisons's board members "unanimously concluded" the offer "significantly undervalued Morrisons and its future prospects" and rejected it on 17 June.

CD&R has issued a statement confirming a possible cash bid and has until 17 July to announce a firm intention to make an offer under UK takeover rules.

Sales at the FTSE 250 (^FTMC) firm increased by 2.7% in the 14 weeks to 9 May, but the supermarket chain had faced a £27m bill for COVID-related costs in the three months prior.

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The blockbuster move by CD&R — one of the biggest takeover firms in the world — would have been one of the UK's most high profile bids in the past year.

It follows a flurry of American private equity interest in UK firms.

In February, Zuber and Mohsin Issa and private equity firm TDR Capital purchased a majority stake in Asda from Walmart (WMT) in a deal worth £6.8bn.

US gambling companies have also been tapping into the expertise of UK rivals in recent months as sports betting has taken off in the US and a rise in online gambling during the COVID pandemic.

In March, jackpot-joy owner Gamesys (GYS.L) agreed a possible takeover by Bally's Corporation (BALY) in a deal valued at more than £2bn.

FTSE 100 (^FTSE) firm and Ladbrokes owner Entain (ENT.L) earlier this year rebuffed an approach from American casino stalwart MGM.

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