Morrison (wm) Supermarkets Share Discussion Threads

[loganair] 24/8/2021 20:18

Trustees of Morrisons’ pension schemes have broken cover to warn that a £7bn private equity takeover threatens to “materially weaken” their financial position, and demanded additional security over some of the supermarket’s assets.

Trustees who represent the schemes’ 85,500 members are concerned that they will be outranked by lenders who are helping fund the takeover should the supermarket hit trouble – meaning pensioners would have to wait for banks to be repaid first during a crisis.

They are also worried about the cost of servicing that debt burden , as well as future corporate activity including refinancing and restructuring.

Steve Southern, the chair of trustees for the Morrisons Retirement Saver Plan and the Safeway Pension Scheme, said more protection was needed and they wanted it to be in place before shareholders vote on the deal.

Unlike many company schemes, the two pension funds, which are closed to new members, are in surplus. They benefit from security over some of the company’s large freehold property estate.

However, they do not have enough money to buy annuities for their 85,500 members, with the cost of doing so estimated to be £800m on a windup basis, the trustees said. The current funding arrangements would allow them to complete this task within a decade.

While this “buy out” deficit remained, they said, the schemes were dependent on the Morrisons business for support, and if it were to go bust they would be an unsecured creditor.

Whether it was an offer from CD&R or Fortress that succeeded, without additional protection the change in ownership would weaken the company’s ability to support the schemes, the trustees said in a lengthy statement.

Pensions have become an increasingly sensitive area in takeovers, after high-profile scandals such as Sir Philip Green’s £1 sale of BHS which left a huge hole in the department store chain’s pension scheme. He later paid £363m to make it good.

The trustees had been in talks with Fortress since last month when the grocer’s board backed its offer for the company. However, the board has now switched to CD&R and as yet they have not had the same opportunity to hold discussions with the buyout firm, although an initial meeting has taken place.

In a statement CD&R said that if its takeover was successful the pension rights of all of Morrisons’ management team and employees would be “fully safeguarded”. It described it first meeting with the trustees as a “positive discussion” and said it accepted that they would want to discuss providing additional security to the schemes through an appropriate mitigation package.

“Given their position as important stakeholder in Morrisons, CD&R looks forward to further positive engagement with the trustees and to providing the appropriate support to the schemes and its members,” it said.

The trustees said they wanted to agree an appropriate mitigation package – which would be likely to focus on signing over the rights to more of the company’s property – with CD&R as soon as possible. They would also demand the same concessions from Fortress should it continue to pursue an offer for Morrisons.

John Ralfe, an independent pensions consultant who has previously advised Morrisons on its pension schemes, said the trustees were “doing the right thing in asking for cash or security to protect the position of members”, and suggested the figures involved would not be a dealbreaker.

“The schemes are in good shape, so the buy out deficit is only £800m, not large in the context of the CD&R offer,” he said. “CD&R should get out their chequebook and pay some or all of this.”

[leadersoffice] 23/8/2021 11:23

The whole food retail sector now alight

[chinese investor] 22/8/2021 17:59

Morrisons has reportedly lined up the former Tesco chief executive Sir Terry Leahy as its next chairman, as the supermarket’s takeover war continues.

Leahy is in pole position to fill the role due to his retail nous and previous track record at discounter B&M, The Telegraph reported.

He is being lined up as the next chairman of Morrisons if the £7 billion takeover offer from US private equity firm CD&R is successful.

Leahy is also a senior adviser at CD&R.

B&M chief executive Simon Arora reportedly had a good working relationship with Leahy when he was chairman of the discounter, which led to a fruitful exit for CD&R after it floated the chain on the London Stock Exchange.

The same would apply to Morrisons chief executive David Potts, who used to work with Leahy at Tesco.

Morrisons denied that Potts would be opposed to working for Leahy again, despite rumours.

A clear out of the non-executive directors is also on the cards, which is standard practice after a takeover deal.

Two CD&R executives who are working on the Morrisons deal – Marco Herbst and Gregory Lai – could take a place on the supermarket’s board.

Leahy was at the helm of Tesco for 14 years as chief executive, overseeing a period of rapid growth, before retiring in 2010.

He would replace Andrew Higginson, Morrisons’ current chairman, who joined in 2017.

[loganair] 20/8/2021 16:18

There is also the still the slight potential that a major retail group could enter the fray with an offer.

Morrisons has a long-standing partnership with US online retail giant Amazon, with Morrisons selling groceries through its online platform in the UK.

Amazon has also boosted its bricks-and-mortar retail business in recent years with its acquisition of Whole Foods in 2017 and its recent launch of three Amazon Fresh till-free stores in London.

AJ Bell investment director Russ Mould said: “Strategically, Morrisons has cemented an important relationship as a key supplier and partner to Amazon, and to McColl’s convenience stores.

“Amazon has long been touted as a potential buyer for Morrisons to help give it a much stronger foothold in the UK grocery markets so that’s an obvious name to watch.”

[loganair] 20/8/2021 16:14

As things stand, a shareholder vote on CD&R’s 285 pence-a-share bid won’t happen until October. If Fortress opts to return with an even higher offer, as Morrisons’ 292 pence share price on Friday morning seems to suggest, the process could drag on even further, especially as CD&R might counter-bid again.

Handily, the UK’s Takeover Panel has an alternative to this sort of bid-a-thon, which might seem good for shareholders but is bad for businesses as managers spend months obsessing over M&A instead of running their companies. Calling on bidders to participate in an auction, as recently happened with Carlyle and Philip Morris International’s pursuit of Vectura, can break the cycle.

The panel can probably force the issue towards the end of September if both sides remain at loggerheads. Morrisons’ board could call for such a circuit-breaker sooner. While that might seem against its price-maximising interests, it could still be a good idea.

CD&R may be able to juice its returns by using an undivulged amount of preference shares. It might also grow Morrisons’ top line by parachuting ex-Tesco boss Terry Leahy in as chairman. But further bidding will naturally lower returns and increase the chances of buyer regret. There’s an argument for putting everyone out of their misery.

[leadersoffice] 20/8/2021 15:08

Correction: bid!

[leadersoffice] 20/8/2021 15:07

As a new bud has been officially announced via the market this morning, there will be a new timetable announced. It may have already been announced in the RNS. Forget about 5pm today.,,. That is yesterday's chip paper

[jlondon] 20/8/2021 13:24

MORRISONS TAKE-OVER
In the last extension, the deadline was 5pm, Fri, 20 Aug 2021.
A higher bid has been forthcoming by CD & R at £2.85 last night.

The share price is £2.91 or there about currently. Whilst Fortress has said not to do anything, nevertheless, will they seek an extension BEFORE 5pm, Fri, 20 Aug 2021 or make a counter bid? It was rather unclear as to the procedural as they did not say?

[chinese investor] 20/8/2021 07:37

That'll do !

[leadersoffice] 20/8/2021 07:29

Dora

Terry Leahy was exceptional running Tesco during his reign. They could do no wrong. It went down hill when he left after it was revealed they'd been cooking the books! He as chairman is a good move. However...We as shareholders won't get to share in any fruits of their labour which is a pity. If there had been an option to retain shareholding.... I would have done so. Morrisons has been a good investment over the years.... may not have lit up the sky...but you always knew what you were getting. It used to be good for income until the rise of Aldi and Lidl. It has been true for many years...the UK grocery market has become saturated and is ripe for consolidation.
However...lets see if Fortress comes back with a higher offer. This saga could roll on for a while longer....

[doratheexplorer] 20/8/2021 07:16

'Interested parties' will avoid a snap reaction into a bidding frenzy. Nothing will happen this weekend in terms of offers. Fortress (& others) now have plenty of new time to dilligently consider their move and table higher bids if they so desire

[waldo2020] 20/8/2021 07:07

Good start to the day! Weekend may hopefully bring others to the table and join the bidding.

[rayrac] 20/8/2021 06:56

Going past 300!

[leadersoffice] 19/8/2021 21:35

There's more ...... Fortress has made a statement saying "it notes Clayton Dubiler & Rice latest offer and we are currently considering our options. We urge Morrisons shareholders to take no action "Are we going head to head with a bidding war ? The deadline of the 20.8.21 for a put up or shut up will lapse and the date will now be extended.

[leadersoffice] 19/8/2021 21:13

Hope we still get the dividend lol

[nerdlinger] 19/8/2021 21:07

so the Friday a week before the court meeting, 24th Sept, will probably be the new deadline for counter bids. 1st September - FTSE quarterly review. 9th September - interims.

[ny boy] 19/8/2021 21:04

I might make a bid tomorrow, I’ll sleep on it first

[tygwyg] 19/8/2021 20:56

Hello Market Bidco

[nerdlinger] 19/8/2021 17:25

I had one of those notes from my broker a few days before the revised offer and another one two days ago. Not weird. I suspect CD&R are leaving it to the last minute in the hope the share price falls below the price they want to offer...

[darkelf1] 19/8/2021 17:08

I heard bbc say bid later today but nothing that I can see.

[badger010776] 19/8/2021 16:31

That's my only confusion as to why it seemed a done deal if brokers sending email with values.. be better off selling in market at current rate...

[leadersoffice] 19/8/2021 16:15

Yes but that's what's on the table right now so they have to hold the party line. We will know within hours as tomorrow is the final day of put up or shut up.