Bidding war brewing for UK grocer Morrisons

Private equity group, Apollo Global Management, is in the preliminary stages of evaluating a possible offer for Morrisons but had not approached its board

Morrisons said its board had recommended a takeover led by SoftBank-owned Fortress Investment Group that valued the firm at £6.3bn (€.7.4bn).

The $8.7bn (€7.3bn) bid battle for Britain's fourth-largest supermarket group Morrisons has ratcheted up with a third private equity group, Apollo Global Management, entering the fray.

US group Apollo, which last year missed out on buying Asda, the number three grocery player in the UK, said it was in the preliminary stages of evaluating a possible offer for Morrisons but had not approached its board.

On Saturday Morrisons said its board had recommended a takeover led by SoftBank-owned Fortress Investment Group that valued the firm at £6.3bn (€7.4bn). 

The offer from Fortress, along with Canada Pension Plan Investment Board and Koch Real Estate Investments, exceeded a £5.52bn (€6.44bn) unsolicited proposal from Clayton, Dubilier & Rice (CD&R), which Morrisons rejected on June 19.

Analysts have speculated that other private equity groups and Amazon, which has a partnership deal with Morrisons, could create a potential bidding war.

The interest in Morrisons underlines the growing appetite from private funds for British supermarket chains, which are seen as attractive because of their cash generation and freehold assets.

Ultimately, the fate of Morrisons will be decided by its shareholders. As things currently stand they will vote on the Fortress deal.

• Reuters