The offer from Fortress Investment Group, which is backed by Canada Pension Plan Investment Board and Koch Real Estate Investments, exceeds the £5.52bn proposal from US private equity firm Clayton, Dubilier & Rice (CD&R), which Morrisons firmly rejected on June 19, saying it was far too low.
In a statement Morrisons said: “Morrisons and Fortress place very significant emphasis on the wider responsibilities of ownership of Morrisons.
“These responsibilities include recognising the legacy of Sir Ken Morrison, Morrisons’ history and culture, and the important role that Morrisons plays for all stakeholders, including colleagues, customers, members of the Morrisons Pension Schemes, local communities, partner suppliers, British farming and the wider British public.
“Fortress’ investment approach is to acquire companies with strong management teams and empower them to deliver their long-term strategy.”
Fortress said it has experience investing in retail and food in the UK (including Majestic Wine) and a 19-year track record of successfully investing in the grocery industry and petrol forecourt stations in the US.
The Bradford-based grocer said: “Fortress intends for Morrisons to continue to operate as a standalone business, with its head office and head office functions remaining in Bradford, led by the Morrisons management team.
“Fortress is committed to being a good steward of Morrisons through the next stage of its evolution and will support Morrisons and its employees in executing management’s existing strategy, including: strong customer focus; vertically integrated supply chain; targeted new store openings and job creation; and focus on wholesale and online channels.
“Fortress believes that Morrisons’ colleagues are its greatest asset and fundamental to the future success of the Morrisons business.
“Fortress confirms that, following the offer becoming effective, the existing employment rights, including existing pension rights of the management and employees of Morrisons, will be fully safeguarded.
“In particular, Fortress is fully supportive of Morrisons’ recent pay award of at least £10 an hour for all Morrisons colleagues in stores and manufacturing sites, which Fortress views as an important and appropriate recognition of their contribution to Morrisons. Fortress does not intend to make any change to the benefits provided by the Morrisons Pension Schemes.”
Andy Higginson, chairman of Morrisons, said: “The Morrisons directors believe that the offer represents a fair and recommendable price for shareholders which recognises Morrisons’ future prospects.
“Morrisons is an outstanding business and our performance through the pandemic has further improved our standing and enabled us to enter the discussions with Fortress from a hard-won position of strength.
“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’s 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.
“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.”
Under the terms of the deal, Morrisons shareholders will receive 254p a share, made up of 252p in cash and a 2p cash dividend.
Morrisons said the offer represents a premium of 42 per cent to its closing share price of 178p on June 18 – the last business day before CD&R’s proposal.
Shares in Morrisons closed on Friday at 243p, valuing the business at £5.8bn.
Fortress is a global investment manager with about $53bn in assets under management.
Morrisons said an initial unsolicited proposal was received from Fortress on May 4 at 220p a share, which was not made public.
Fortress then made four subsequent proposals before its offer reached a total value of 254p a share on June 5.