UK's Morrisons rejects $7.6 billion takeover proposal from CD&R

British supermarket group Morrisons has rejected a proposed 5.52 billion pound ($7.62 billion) cash offer from US private equity firm Clayton, Dubilier & Rice (CD&R), saying it is far too low.

 

Britain’s fourth largest grocer by sales after Tesco, Sainsbury’s and Asda, said it received the “unsolicited, highly conditional non-binding” proposal of 230 pence a share on Monday.

 

The board of Bradford, northern England-based Morrisons rejected the proposal on Thursday.

 

“The board of Morrisons evaluated the conditional proposal together with its financial adviser, Rothschild & Co, and unanimously concluded that the conditional proposal significantly undervalued Morrisons and its future prospects,” the group said in a statement on Saturday.

 

Shares in Morrisons, down 5.5 per cent over the last year, closed on Friday at 182 pence, valuing the group at 4.33 billion pounds.

 

Morrisons said CD&R’s proposal provided for Morrisons shareholders to also still receive a final ordinary dividend of 5.11 pence per share announced on March 11.

 

CD&R had earlier on Saturday said it was considering a possible cash offer for Morrisons.

 

Under British takeover rules CD&R has until July 17 to announce a firm intention to make an offer.

 

CD&R’s approach underlines private equity’s growing appetite for UK supermarket assets, attracted by their cash generation and freehold assets.