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Clayton, Dubilier & Rice (CD&R) has been granted an extension on today’s ‘put-up or shut-up’ takeover deadline to weigh up whether to make a higher bid for Morrisons.
The US private equity house was widely expected to make a counter offer for the supermarket chain before 5pm today, but was hit by a surprise pre-emptive strike from the Fortress-led consortium on Friday.
Fortress re-raised its own 254p-a-share offer after a handful of the biggest Morrisons shareholders publicly opposed the deal at the £6.3bn price.
The consortium, which was recently given more firepower by Singapore’s sovereign wealth fund coming on board, upped the bid to 272p, including a 2p special dividend, in the hope of heading off CD&R and winning the shareholders round to a new £6.7bn valuation.
CD&R, which counts former Tesco CEO Sir Terry Leahy as a senior adviser, requested more time to consider whether it could beat the new Fortress offer.
Following the renewed offer from Fortress on Friday, Morrisons announced the shareholder meeting, scheduled for 16 August, to approve the deal would be adjourned until 27 August.
This morning the Takeover Panel, which regulates potential deals for public companies, announced CD&R now had until 5pm on 20 August to either make a new offer or walk away.
Morrisons, Fortress and CD&R have all accepted the new ruling.
Shares in Morrisons climbed a further 0.7% to 280.8p this morning in anticipation of a bidding war kicking off.
Morning update
Tobacco giant Philip Morris (PMI) has stepped up its pursuit of respiratory drugmaker Vectura with a new, higher offer as the takeover battle with private equity giant Carlyle intensified.
PMI increased its offer price to 165p per share, valuing Vectura at just more than £1bn.
The bid represents a 10% premium to the 155p-a-share offer from Carlyle, which Vectura’s board recommended to shareholders on Friday after pulling its support for the previous PMI bid.
PMI said its business model and strategy is driven by a long-term commitment to the transformation of its business and “not a search for short term gains and efficiency”.
“PMI’s proposed acquisition of Vectura is part of its long-term strategy, as outlined in its 2020 integrated report,” it added. “As part of that vision, PMI will build on its leading scientific capabilities to develop products and services that go ’Beyond Nicotine’.”
PMI aims to achieve at least $1bn in annual net revenues from ‘Beyond Nicotine’ sources in 2025.
The approach from PMI has attracted widespread criticism from politicians and medicine organisations outraged that a tobacco company could own a business developing treatments for lung diseases.
Vectura noted on Friday - in its recommendation of the Carlyle offer - that the “reported uncertainties relating to the impact on Vectura’s wider stakeholders arising as a result of the possibility of the company being owned by PMI (Philip Morris)”.
Shares in Wiltshire-based Vectura, which develops inhalers and inhaled medicines to treat respiratory illnesses, surged 2.3% to 167.8p this morning.
McColl’s Retail Group has confirmed it is exploring options to raise fresh funds to increase the number of its Morrisons Daily c-store conversions and accelerate the pace of the roll-out of the programme.
It comes after Sky News reported yesterday that the convenience store group was planning to announce a placing of share to raise £30m.
“No final decisions have been made on whether to proceed with a capital raise or with regards to the timing or size of any such capital raise,” McColl’s said in a short statement this morning.
“The company will make a further announcement if and when appropriate.”
Shares in McColl’s plunged 20% to 28p as markets opened this morning in anticipation of the new capital raise. The group now has a market cap of just £33m.
Domino’s Pizza Group has reached an agreement to sell its Swiss business for about £200,000.
The disposal of Domino’s Switzerland is the final part of the group’s planned exit from all directly operated international markets to focus on its core UK and Ireland operations, as announced by the company in October 2019.
The transaction is expected to complete by the end of August 2021.
The FTSE 100 started the week on the back foot, falling 0.2% to 7,106.57pts.
Deliveroo has soared 8.4% higher to 352.5p this morning after the food delivery group revealed in a stock exchange filing that German rival Delivery Hero had taken a 5.1% stake in the company. However, the stock is still below its 390p flotation price.
Other risers this morning include Hilton Food Group, B&M European Value Retail and Reckitt Benckiser.
Aside from McColl’s, fallers include Hotel Chocolat Group, Parsley Box Group, Science in Sport and McBride.
This week in the City
It is looking like another quiet week for scheduled market updates as the summer continues to roll on.
First thing tomorrow is the latest BRC-KPMG retail sales figures for July, along with quarterly results from HelloFresh.
Wednesday brings interims from Deliveroo, while Glanbia and Coca-Cola HBC reveal their half-year figures on Thursday.
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