Three months on from announcing the deal, Morrisons confirmed today that the £2.5bn sale of its 337-strong forecourt business to MFG has been completed. The move is aimed at helping the struggling supermarket shore up its balance sheet so it can focus on its turnaround plan.
The transaction marks the start of a partnership between Morrisons and MFG, both of which are owned by US private equity firm Clayton, Dubilier & Rice (CD&R). The deal included Morrisons taking a minority stake of approximately 20% in MFG and entering into commercial and supply agreements with the forecourt operator.
Morrisons stated today that it intends to use the cash proceeds of £1.8bn (after fees and expenses related to the transaction) to strengthen its capital structure and repay certain debt obligations.
The retailer was left with a £5.5bn debt burden from its takeover by CD&R, which has hindered it in the price battle against the discounters and its traditional rivals.
Last month, Morrisons issued an upbeat first-quarter trading update, with new Chief Executive Rami Baitiéh suggesting that his turnaround strategy was beginning to yield positive results.
NAM Implications:
- The £1.8bn cash proceeds set against its £5.5bn debt should help in reducing Morrisons’ cost of servicing debt…
- …meaning they could be better able to support price cuts vs rivals.
