CD&R’s £7bn takeover of Morrisons has cleared its final regulatory hurdle, more than eight months after the deal was completed.
The Competition and Markets Authority (CMA) announced today that it had accepted the private equity firm’s offer to sell 87 petrol stations to address concerns over higher fuel prices.
The regulator had already said last month it was minded to accept CD&R’s proposals.
The CMA launched a Phase 1 investigation into the Morrisons deal back in January. Whilst the takeover had already been completed, the regulator ordered all parties to remain separate and hold off on integration plans until its probe had taken place.
Concerns centred around CD&R also owning the Motor Fuel Group (MFG), the largest independent operator of petrol stations in the UK with 921 sites under brands such as Esso, BP, Shell, Texaco, Jet and Murco. Meanwhile, Morrisons operates 339 petrol stations, the vast majority of which are located at its supermarkets across the country.
The CMA announced in March that it found the deal raises competition concerns in relation to the supply of petrol and diesel in 121 local areas across England, Scotland and Wales. These are all areas in which MFG and Morrisons both have petrol forecourts and would face only limited competition after the merger, meaning that the deal could lead to an increase in prices.
Facing the prospect of a full Phase 2 investigation, CD&R offered to divest a number of the petrol stations to gain approval for the takeover.
Commenting on today’s announcement, Morrisons Chief Executive David Potts said: “I am pleased the acquisition has cleared the final regulatory hurdle and we can now work closely with CD&R on the path ahead.
“Following hard on the heels of Covid, the cost of living crisis is another critical period for food retailers in the UK and there is important work ahead of us as we look to help customers and colleagues through these difficult economic times.”
Morrisons warned in April that its sales and core profit for the year were facing a hit from the crisis in Ukraine and rising inflation.
Last month, Morrisons bought convenience store chain McColl’s out of administration. The CMA is currently investigating that deal.
NAM Implications:
- Surrendering competing sites was never really an issue.
- Key now will be how CD&R and Morrisons work together to optimise their relationship…
- i.e. cost reduction, sale & leaseback of assets, shelf-price increases…
- Time to reassess relative competitive appeal?
