A trio of investors active in the real estate sector have had their £6.3bn offer for supermarket group WM Morrison recommended.
The offer for the chain, which operates around 500 supermarkets across the UK – some 85% of which are held freehold by the retailer, implies an enterprise value for the business that is more than eight times its most recent operating profit.
The bid, led by Fortress, also includes equity from Canada Pension Plan Investment Board and Koch Real Estate Investments. Koch is one of the largest privately held business in the US.
Fortress has said that it “does not anticipate engaging in any material store sale-and-leaseback transactions” at Morrisons and noted that it had not sold any of the freehold or long leasehold properties in the Majestic Wine estate since its acquisition of the business in 2019. In fact, the investor said that it would support Morrisons’ ongoing strategy of targeted new store openings.
Under its new ownership, Morrisons will continue to operate as a stand-alone business, with its head office in Bradford retained along with its management team.
Morrisons chairman Andrew Higginson said: “We have looked very carefully at Fortress’ approach, their plans for the business and their overall suitability as an owner of a unique British food-maker and shopkeeper with over 110,000 colleagues and an important role in British food production and farming. It is 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.”
He added: “Fortress, CPP Investments and KREI all have strong track records and a long-term approach to investing. They are backing our strategy, our management and our people. Morrisons has a rich history and a special culture and I am convinced that with the long-term support of Fortress, the business will continue to prosper in the future.”
Joshua Pack, managing partner of Fortress, said: “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.”
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