Buyout giant considers £5.5bn bid for supermarket chain Morrisons

Published

4 years ago

June 19, 2021

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One of the world’s biggest buyout firms is weighing a spectacular £5.5bn takeover bid for Wm Morrison, Britain’s fourth-largest supermarket chain by market share.

Sky News has learnt that Clayton Dubilier & Rice (CD&R) is in the early stages of evaluating an offer for the grocer, a move that would send fresh shockwaves through the UK’s food retailing industry.

With a workforce of approximately 110,000 people, Morrisons is one of the biggest private sector employers in Britain.

CD&R is said to have begun approaching banks about financing a potential bid for Morrisons in recent days.

It is also understood to have made a preliminary approach to Morrisons’ board.

One source cautioned, however, that a formal bid for the grocer was far from certain and that the public disclosure of CD&R’s interest could force the project to be abandoned.

The Takeover Panel, which polices merger activity involving London-listed companies, is likely to seek clarification from CD&R and Morrisons about whether they are in discussions.

It is possible that the buyout firm would cease work on a deal rather than confirm it publicly, as has happened in other recent UK takeover situations, according to one source.

If it does progress, however, a bid could entail a dramatic re-emergence in Britain’s supermarket sector by Sir Terry Leahy, one of CD&R’s operating partners in Europe.

Sir Terry, who reigned over Tesco for 14 years before retiring in 2010, would be expected to play a key role in a bid.

If a deal is completed, it would potentially reunite Sir Terry with Andrew Higginson and David Potts, Morrisons’ chairman and chief executive respectively, who both spent much of their careers at Tesco.

Further details of CD&R’s interest in Morrisons were unclear this weekend, although based on a conventional takeover premium, any offer would value the company at £5bn or more.

It was also unclear whether CD&R’s interest was being pursued on a standalone basis, or with a strategic or financial partner.

Morrisons had a market value at Friday’s closing share price of £4.3bn, with significant value still remaining in its freehold property portfolio.

Its shares have remained broadly flat during the last year, and are roughly midway between their peak and trough over that period.

Morrisons has a grocery market share of just over 10%, trailing third-placed Asda on 14.4%, according to Kantar, the market research group.

A takeover by CD&R would be the latest seismic deal in Britain’s grocery sector.

In 2019, J Sainsbury and Asda abandoned their attempt to merge into a £15bn retail group after it was blocked by the Competition and Markets Authority (CMA).

That decision spurred Asda’s owner, Walmart, to kick off an auction of the third-biggest supermarket by market share.

Last September, a consortium comprising TDR Capital and EG Group, the petrol stations giant controlled by Mohsin and Zuber Issa, was selected as the preferred bidder for Asda in a £6.8bn deal.

Their takeover was approved by the CMA this week after agreeing to sell 27 Asda petrol stations.

Asda’s new owners are now engaged in the search for a new chief executive to replace Roger Burnley, who will step down in the coming months.

CD&R ranks among the world’s largest private equity investors, having raised $16bn for its latest buyout fund earlier this year.

In the UK, it has been a prolific acquirer of large businesses, including B&M Retail, the discount chain which is now a publicly quoted company, and Motor Fuel Group (MFG), the petrol forecourt operator.

It has also participated in the recent frenzy of private equity bidders for London-listed companies, agreeing a £2.6bn takeover of the pharmaceuticals group UDG Healthcare several weeks ago.

The US-based buyout firm is regarded as a supportive long-term investor in the companies it backs, frequently building significant multibillion dollar enterprises from relatively small initial purchases.

People who have worked with CD&R in the UK say it significantly increased employment at companies including B&M and MFG after investing in their growth.

CD&R is said to have been attracted to Morrisons’ strong balance sheet and management team, although Mr Potts, 64, is expected to retire in the next few years.

The company was founded in 1899 by egg and butter merchant William Morrison at a stall in Bradford Market, it opened its first shop in 1958.

Its maiden supermarket followed three years later and in 1967, it floated on the stock exchange, preceding an unbroken 35-year run of sales growth which ultimately took it into the FTSE-100 index in 2001.

By then, Sir Ken Morrison, William’s son and the company’s veteran boss, had been knighted and in 2004 he engineered the most audacious move in Morrisons’ history: the £3bn takeover of Safeway which transformed it into a major nationwide grocery retailer.

Sir Ken stepped down as chairman in 2008, and he died in 2017 at the age of 85.

Morrisons’ performance stuttered under Dalton Phillips, who was ousted in 2015, leading to the appointment of Mr Potts.

Alongside Mr Higginson, the chief executive has engineered an impressive turnaround, and has signalled that more cash will be returned to shareholders as business normalises in the aftermath of COVID19.

CD&R’s interest in the chain is not the first time that a prospective buyer has examined an offer for Morrisons.

Amazon has been repeatedly rumoured as a suitor, with Morrisons established as a supplier of food products to the online behemoth’s Prime Now and Pantry customers.

Earlier this month, Morrisons was on the receiving end of one of the biggest shareholder revolts in UK corporate history when 70% of investors voted against its pandemic pay packages.

City institutions rebelled over its remuneration committee’s use of discretion to override the exceptional costs incurred by the coronavirus crisis.

Morrison’s saw annual profits slump to £201m last year, having decided – along with other big supermarkets – to hand back £230m in business rates relief to the government.

However, it has predicted that profits will rebound sharply this year and next as COVID-related costs subside.

This week, Tesco warned that sales are likely to fall as shopping behaviour returns to pre-pandemic levels.

CD&R and Morrisons both declined to comment on Saturday.

Business

Ministers to kick off hunt for successor to Ofcom chair Lord Grade

Published

3 hours ago

May 31, 2025

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Ministers to kick off hunt for successor to Ofcom chair Lord Grade

Ministers are to kick off the hunt for a new chair of the communications regulator as Lord Grade of Yarmouth prepares to bow out after a single term at the helm.

Sky News has learnt that the Department for Science, Innovation and Technology (DSIT) – which now leads oversight of Ofcom in Whitehall – is drawing up proposals to launch a recruitment process in the coming months.

Lord Grade, the veteran broadcast executive who held senior posts at the BBC, ITV and Channel 4, has served as Ofcom chair since May 2022.

His four-year term is not due to end for another 11 months, and there was no suggestion this weekend that he would leave the role ahead of that point.

Insiders said, however, that there was little prospect of him seeking to be reappointed for a second term in the job.

The now non-affiliated peer’s appointment to the post in 2022 came after a controversial recruitment process and was signed off by Nadine Dorries, the then Tory culture secretary.

Responsibility for Ofcom board appointments has switched since then from the Department for Culture, Media and Sport.

Peter Kyle, the science secretary, authorised the recruitment of Tamara Ingram, an advertising industry stalwart, as Ofcom’s deputy chair, last November.

The search for a new Ofcom chair will come after a significant extension of its remit to encompass areas such as online harms.

Both DCMS, which has responsibility for the media industry, and the Department for Business and Trade also have substantial engagement with Ofcom.

As well as a role in appointing directors to the board of state-owned Channel 4, which is hunting both a chair and chief executive, Ofcom regulates companies such as Royal Mail, as well as the BBC.

This week, the watchdog said it was pursuing action against the formerly publicly owned postal services company over its failure to hit statutory delivery targets.

Ofcom also regulates the UK telecoms industry, making it one of the largest economic regulators in Britain.

Mr Kyle said this week that Ofcom should also prepare to be given regulatory oversight of the fast-growing data centre industry.

One of the tasks of Lord Grade’s successor is likely to be long-term executive leadership succession planning.

Dame Melanie Dawes, Ofcom’s chief executive, has held the role since 2020, although there is no indication that she intends to step down in the short term.

It was unclear this weekend whether any of Ofcom’s existing board members might seek to take over from Lord Grade.

Its slate of non-executive directors includes recently appointed Lord Allan of Hallam, a former MP, and Ben Verwaayen, the former BT Group chief executive.

Mr Verwaayen is due to step down from the Ofcom board at the end of the year.

The hunt for Ofcom’s next chair will come amid a push led by Sir Keir Starmer and Rachel Reeves to shake up Britain’s economic regulators as they seek ways to remove red tape from the private sector.

DSIT has been contacted for comment, while Ofcom declined to comment.

Business

‘Absolutely gutted’: £16,500 Glastonbury packages won’t be fulfilled after company goes bust

Published

22 hours ago

May 30, 2025

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'Absolutely gutted': £16,500 Glastonbury packages won't be fulfilled after company goes bust

Glastonbury ticket holders have been left thousands of pounds out of pocket after a luxury glamping company went bust.

Festival-goers who booked their tickets and accommodation with Yurtel have been told the company can no longer fulfil its orders and has ceased trading with immediate effect.

Money: Read all the latest news here

Some had spent more than £16,500 through Yurtel, with hospitality packages starting at £10,000.

In an email, Yurtel said it was unable to provide customers with any refunds, advising them to go through a third party to claim back the money once the liquidation process had started.

To add insult to injury, customers found out that Yurtel had failed to purchase the tickets for the 25 -29 June festival that they thought had been booked as part of their packages.

In a letter to customers, Yurtel’s founder Mickey Luke said: “I am deeply sorry that you have received this devastating news and am writing to apologise.

“Yurtel is a hospitality business who pride themselves on looking after our customers, delivering a unique product and striving to create a better client experience year on year. Due to a culmination of factors over the past years, we have failed to be able to continue to do so and are heartbroken.”

The Money blog has contacted Yurtel to see if the business has anything to add.

Several people have also reported that they were unable to pay by credit card at the time of booking, with the company instead asking for a bank transfer.

This means they are unable to use chargeback to get a refund. You can read more about that here…

‘I feel really ripped off’

One of those customers was Lydia, who told Money she was “absolutely gutted” after spending thousands.

This year’s festival was “really important” to her as she was forced to miss out last year despite having tickets due to a health issue that left her needing an operation.

“We tried to get Glastonbury tickets through the normal kind of route and couldn’t get them,” the accountant said.

She ended up booking with Yurtel in November, sending over all the funds a month later.

“It’s super expensive. It was really, really important to us. Last year was gutting with the surgery and the whole situation around that was very traumatic, so it was a very special thing to then get the opportunity to go this year. It’s really gutting,” she said.

“I feel really ripped off and I’m really disappointed in the festival, to be honest. I think that response is just pretty rubbish.”

Yurtel did not pay for festival tickets, Glastonbury says

Glastonbury said Yurtel was one of a small number of campsites local to the festival site – Worthy Farm – with limited access to purchase hospitality tickets for their guests in certain circumstances.

But, it had not paid for any tickets for the 2025 festival before going into liquidation, and so no tickets were secured for its guests, it added. Every year, Glastonbury’s website says that ticketing firm See Tickets is the only official source for buying tickets for the festival.

“As such we have no records of their bookings and are unable to take any responsibility for the services and the facilities they offer,” the festival said.

“Anyone who has paid Yurtel for a package including Glastonbury 2025 tickets will need to pursue any potential recompense available from them via the liquidation process as outlined in their communication to you.

“We are not able to incur the cost or responsibility of their loss or replacement.”

Instead, the festival has urged Yurtel customers to contact Yurtel@btguk.com to confirm their consent for personal data and details of their party to be shared with Glastonbury.

“We will then be able to provide details of alternative potential sources for those customers to purchase tickets and accommodation for this year’s festival,” the festival added.

‘Only option’ on offer is ‘pretty weak’

Lydia said she agreed for her details to be passed on to Glastonbury, and the festival has told her the only option is to pay for the tickets again from another provider.

“They are not giving us the opportunity to buy the tickets at face value. We would then have to go again and spend another stupidly unreasonable amount of money to be able to go. It’s pretty disappointing,” she added.

“It’s pretty weak that the only option they’re giving people who’ve already lost out on huge amounts of money is to go and spend huge amounts more money.”

It’s left her feeling like she won’t go to the festival this year – and she’s not hopeful about getting her money back.

She said: “To be honest, I just don’t think I can afford it.

“It’s already so much money wasted, and I’m not at all optimistic we’ll get anything back.”

Business

Federal judges rule Trump tariffs can stay in place for now – as president rages at trade court’s ‘country threatening decision’

Published

24 hours ago

May 30, 2025

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Federal judges rule Trump tariffs can stay in place for now - as president rages at trade court's 'country threatening decision'

A federal appeals court has ruled that Donald Trump’s sweeping international tariffs can remain in place for now, a day after three judges ruled the president exceeded his authority.

The Court of Appeals for the Federal Circuit (CAFC) has allowed the president to temporarily continue collecting tariffs under emergency legislation while it considers the government’s appeal.

It comes after the Court of International Trade blocked the additional taxes on foreign-made goods after its three-judge panel ruled that the Constitution gives Congress the power to levy taxes and tariffs – not the president.

The judges also ruled Mr Trump exceeded his authority by invoking the 1977 International Emergency Economic Powers Act.

The CAFC said the lower trade court and the Trump administration must respond by 5 June and 9 June, respectively.

Trump calls trade court ‘backroom hustlers’

Posting on Truth Social, Mr Trump said the trade court’s ruling was a “horrible, Country threatening decision,” and said he hopes the Supreme Court would reverse it “QUICKLY and DECISIVELY”.

After calling into question the appointment of the three judges, and suggesting the ruling was based on “purely a hatred of ‘TRUMP’,” he added: “Backroom ‘hustlers’ must not be allowed to destroy our Nation!

“The horrific decision stated that I would have to get the approval of Congress for these Tariffs. In other words, hundreds of politicians would sit around D.C. for weeks, and even months, trying to come to a conclusion as to what to charge other Countries that are treating us unfairly.

“If allowed to stand, this would completely destroy Presidential Power — The Presidency would never be the same!”

The US president unveiled the controversial measures on “Liberation Day” in April, which included a 10% tariff on UK imports and caused aggressive sell-offs in the stock market.

Mr Trump argued he invoked the decades-old law to collect international tariffs because it was a “national emergency”.

Tariffs ‘direct threat’ to business – Schwab

The trade court ruling marked the latest legal challenge to the tariffs, and related to a case brought on behalf of five small businesses that import goods from other countries.

Jeffrey Schwab, senior counsel for the Liberty Justice Center – a nonprofit representing the five firms – said the appeal court would ultimately agree that the tariffs posed “a direct threat to the very survival of these businesses”.

US treasury secretary Scott Bessent also told Fox News on Thursday that the initial ruling had not interfered with trade deal negotiations with partners.

He said that countries “are coming to us in good faith” and “we’ve seen no change in their attitude in the past 48 hours,” before saying he would meet with a Japanese delegation in Washington on Friday.