Third private equity firm eyes up Morrisons takeover: Apollo Global Management considering bid

UK supermarket chain Morrisons could be thrust into the centre of a US bidding war with a third American firm now considering a takeover.

New York-based investment giant Apollo said this morning that it could become the latest private equity firm to launch a bid for the Yorkshire retailer.

It comes after Morrisons told investors it had agreed a £6.3billion bid from a consortium of investment groups – led by US firm Fortress.

That came after private equity firm Clayton, Dubilier & Rice (CD&R) made an approach last month.

News of interest from a third firm pushed Morrisons shares up by more than 11 per cent this morning.

But critics have raised fears that customers, staff and suppliers could lose out if a takeover is completed. 

UK supermarket chain Morrisons could be thrust into the centre of a US-based bidding war with a third American firm now considering a takeover, it has today been revealed 

New York-based investment giant Apollo (pictured: Apollo's headquarters at the Solow Building) said this morning that it could become the latest private equity firm to launch a bid for the Yorkshire retailer

New York-based investment giant Apollo (pictured: Apollo's headquarters at the Solow Building) said this morning that it could become the latest private equity firm to launch a bid for the Yorkshire retailer

New York-based investment giant Apollo (pictured: Apollo’s headquarters at the Solow Building) said this morning that it could become the latest private equity firm to launch a bid for the Yorkshire retailer

The US investment firm considering a bid for Morrisons: Who are Apollo Global Management?

Apollo Global Management is an investment management firm based in New York.

The company was founded in 1990 by American billionaires Josh Harris and Marc Rowan.

Its third founder – and until recently its CEO – Leon Black, stepped down earlier this year after it was revealed he had paid paedophile financier Jeffrey Epstein for personal tax-related advice.

The company, which is publicly traded on the New York Stock Exchange, reportedly had around $414billion of assets under management last year – the majority of which were in the credit business.

Noteable assets under its management include US security firm ADT, photography Shutterfly, and the University of Phoenix.

Earlier this year the company, which has a team of around 400 investment professionals, proposed an £11billion with Athene Holding, the US life insurance firm.

The company’s head office is at the impressive 50 storey Solow Building in Midtown Manhattan.

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Today Apollo Global Management became the latest firm to announce it is considering a bid for the Bradford-based supermarket chain.

The New York-based asset management firm confirmed that it is ‘in the preliminary stages of evaluating a possible offer for Morrisons’ on behalf of investment firms managed by Apollo.

It added that no formal approach has yet been made to the board of the Bradford-based chain.

However, the update will spark speculation that shareholders could see a bidding war for the supermarket group.

The interest from Apollo comes two days after Morrisons told investors it had agreed a £6.3billion bid from a consortium of investment groups.

The offer, led by Softbank-owned Fortress which has partnered with Canada Pension Plan Investment Board and Koch Real Estate Investments, will see shareholders receive 252p per share plus a 2p special dividend.

The agreement came almost two weeks after private equity firm Clayton, Dubilier & Rice (CD&R) made an approach last month.

In a statement on Monday, Apollo added: ‘There can be no certainty that any offer will be made, nor as to the terms on which any such offer might be made.’

It is understood that Apollo hired investment bank Morgan Stanley to advise over any potential offer.

Listed convenience store chain McColl’s told investors that its supply contract with Morrisons would not be affected by any potential change in the retailer’s ownership.

In February, McColl’s extended its wholesale supply contract by a further three years to January 2027.

‘McColl’s looks forward to continuing to build on the strong relationship developed with Morrisons over the years to serve our local neighbourhood communities with a high quality convenience offer,’ it said.

The deal was struck by Softbank-owned Fortress, Canadian pension fund CPPIB and a unit of Koch Industries, America's largest private company. Pictured: David Koch, right, with older brother Charles, left, on Morning Joe in November 2015

The deal was struck by Softbank-owned Fortress, Canadian pension fund CPPIB and a unit of Koch Industries, America's largest private company. Pictured: David Koch, right, with older brother Charles, left, on Morning Joe in November 2015

The deal was struck by Softbank-owned Fortress, Canadian pension fund CPPIB and a unit of Koch Industries, America’s largest private company. Pictured: David Koch, right, with older brother Charles, left, on Morning Joe in November 2015

The fears for Morrisons come amid a wave of takeover attempts for British businesses by private equity firms

Morrisons customers and suppliers could lose out after board backs fresh takeover bid from US investors 

By Lucy White for the Daily Mail 

Morrisons customers, staff and suppliers could lose out after the supermarket’s board backed a fresh takeover bid from a group of controversial investors, critics fear.

The chain revealed at the weekend that it had received a second takeover bid, worth £6.3billion, from a consortium led by US private equity firm Fortress – and would recommend the offer to its shareholders.

The bidders have promised to be ‘good stewards’ of the popular British grocery business, vowing to keep the headquarters in Bradford and not to make any ‘material’ sales of its property.

But critics have questioned their intentions. Lord Sikka, a Labour peer and professor at Essex Business School, said: ‘My concern is whether this is a good deal for consumers, employees and businesses in the supply chain. Private equity has a habit of only paying minimum wage and not offering any security to the supply chain.

‘Various firms have made promises in the past to protect British jobs, but we need practical steps. And for that, you need to involve employees in the sale process.’

Morrisons bosses are set for bumper pay-outs under the Fortress offer. Chief executive David Potts would earn £19million for the 3million shares he owns outright and 4.6million that he could receive under various company reward schemes.

Operating chief Trevor Strain could make £11million and finance boss Michael Gleeson more than £3million.

Morrisons’ shareholders will now vote on the deal. It must be passed by more than 50 per cent of those who vote and together they must hold 75 per cent of the company. 

But top-ten shareholder, fund manager JO Hambro, said last week that bidders should be offering 270p per share for Morrisons – well above Fortress’s bid of 254p.

Private equity firms buy companies and look to sell them on around five years later for a profit. But they are often criticised for their brutal tactics and short-term outlook.

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It comes as critics raised fears that Morrisons customers, staff and suppliers could lose out after the supermarket’s board backed Fortress’ takeover bid. 

The bidders have promised to be ‘good stewards’ of the popular British grocery business, vowing to keep the headquarters in Bradford and not to make any ‘material’ sales of its property.

But critics have questioned their intentions. Lord Sikka, a Labour peer and professor at Essex Business School, said: ‘My concern is whether this is a good deal for consumers, employees and businesses in the supply chain. Private equity has a habit of only paying minimum wage and not offering any security to the supply chain.

‘Various firms have made promises in the past to protect British jobs, but we need practical steps. And for that, you need to involve employees in the sale process.’

Morrisons bosses are set for bumper pay-outs under the Fortress offer. Chief executive David Potts would earn £19million for the 3million shares he owns outright and 4.6million that he could receive under various company reward schemes.

Operating chief Trevor Strain could make £11million and finance boss Michael Gleeson more than £3million.

The new Fortress-led offer will also include Canadian pensions giant CPPIB and KREI, a division of Koch Industries, owned by billionaire Donald Trump ally Charles Koch. Fortress was founded in 1998 by partners including Wesley Edens, a majority shareholder in Aston Villa football club.

Morrisons’ shareholders will now vote on the deal. It must be passed by more than 50 per cent of those who vote and together they must hold 75 per cent of the company. 

But top-ten shareholder, fund manager JO Hambro, said last week that bidders should be offering 270p per share for Morrisons – well above Fortress’s bid of 254p.

Private equity firms buy companies and look to sell them on around five years later for a profit. But they are often criticised for their brutal tactics and short-term outlook.

Critics drew attention to the track record of Morrisons’ new bidders. Charles Koch and his late brother David sparked anger in 2010 after pumping more than £700,000 into a campaign to repeal California’s climate change laws. The family’s foundation, which invests in property, has also funded pushes to evict tenants from their homes during the pandemic.

Meanwhile, CPPIB refused to back an agreement between shopping centre business Intu and its lenders to give it breathing room on its debt last year.

The fears for Morrisons come amid a wave of takeover attempts for British businesses by private equity firms. 

Buyout companies unveiled 365 offers for companies between January and June – the most since records began in 1984 – leading to accusations of ‘pandemic plundering’ as they rush to snap up businesses on the cheap.

Last month, Morrisons rejected US giant Clayton Dubilier and Rice’s £5.5billion bid. 

Link hienalouca.com

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