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Future Of Morrisons To Be Decided By Auction This Weekend

The UK’s takeover regulator has ruled that the four-month-long fight for Morrisons will be decided by an auction between two private equity groups on Saturday.

With neither Clayton, Dubilier & Rice (CD&R) or the Fortress Investment consortium declaring their offers as final, the Takeover Panel said today that it would run up to five rounds of bidding to decide a winner.

Either firm can make an increased offer in the first round. If neither does so, then CD&R’s current highest bid of 285p a share will be put to a vote by shareholders.

However, if there is a revised proposal in round one, then the other bidder can increase their offer in the subsequent rounds. If no winner has emerged after four rounds, then both parties may revise their offers in the final round. To prevent a situation where equal bids are made in the fifth round, any increased offer put forward by Fortress must be at an even number of pence per share while CD&R must bid in odd increments.

At the end of the process, the board at Morrisons will have to make a recommendation to shareholders in favour of one of the two offers by 5 October. The company is currently recommending the CD&R offer with it recently setting a date of 19 October for investors to approve the deal.

The Takeover Panel noted that either bidder can make a revised offer outside the auction process before 5pm on 1 October. If before then, it’s announced that they do not intend to raise their bid, the auction will not go ahead.

The regulator said Morrisons, Fortress and CD&R had all agreed to the terms of the auction procedure.

US private equity firm CD&R started its pursuit of the UK’s fourth-largest grocer in June, but its initial 230p per share offer was rejected for being too low. Softbank-backed Fortress entered the fray in July, winning the support of the board of Morrisons for bids at 252p and then 270p a share.

CD&R returned last month to trump Fortress with a 285p offer, valuing the supermarket group at £7bn.

Rumours of Amazon and other private equity firms entering the race failed to materialise.

Shares in Morrisons were trading at around 296p this morning.

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