Apollo Global enters race to buy UK’s fourth largest supermarket chain Morrisons

UK – Global alternative investment management firm, Apollo Global Management, has joined the race to acquire UK’s fourth largest supermarket chain, Morrisons. 

Apollo Global’s purchase bid comes just days after Morrisons accepted a £6.3 billion (US$8.7 billion) takeover bid by a consortium led by the Fortress Investment Group.  

The consortium of investors targeting the acquisition also includes Canada Pension Plan Investment Board and Koch Real Estate Investments, the vehicle of the US billionaire Charles Koch.

Founded in 1889 as an egg and butter stall in Rawson Market, Morrisons has expanded over the years to become a major retail chain with almost 500 shops in the UK and about 110,000 staff. 

The group has remained publicly owned since 1967, with the firm now largely owned by a raft of institutional shareholders, including Silchester International, Columbia, Blackrock, and Schroders. 

Despite a boom for many retailers during the pandemic, Morrisons was among grocers to post lower annual profits after being hit by high pandemic costs. 

Apollo’s entry into the race however shows that the retail chain’s underperformance has not been significant enough to scare away potential bidders.

Speculation of a bidding war is already rising as Apollo Globe is now the third firm to show interest in Morrisons in recent months. 

Last month, the supermarket group turned down an offer worth £5.5 billion (US$7.6 billion) from a different firm, Clayton, Dubilier & Rice, saying “it had significantly undervalued the business.” 

In a statement, Apollo has said that it is in the preliminary stages of evaluating a possible offer for Morrisons on behalf of investment firms managed by Apollo but is yet to table a formal bid. 

However, it added: “No approach has been made to the board of Morrisons. There can be no certainty that any offer will be made, nor as to the terms on which any such offer might be made.” 

The entry of Apollo has had analysts speculating that other private equity groups and e-commerce giant Amazon, which has a partnership with Morrisons, could also join the fray. 

UK reports however indicate that the Fortress Group and its partners are tipped to win the bid for Morrisons after giving commitments to preserve the legacy of its founding family. 

Fortress highlighted that it reversed planned redundancies at Majestic after it bought the business and would look to invest in Morrisons, further sweetening its bid.  

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