Morrisons’ biggest shareholder attacks buyout deal

The largest investor in Morrisons has said it is “not inclined” to back a £6.3 billion takeover deal of the supermarket by an investment consortium.

Silchester International, which owns a 15.1 per cent stake, said there was “little in the recommended offer that could not be achieved by Morrisons as a listed company.”

A 254p-a-share bid had been made by a group led by private equity firm Fortress early this month.

However, the shareholder did not rule out a buyout deal completely, instead claiming there was “insufficient opportunity for competing bids to emerge”.

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The intervention reduces the chances of the Fortress agreement succeeding when a vote is put to shareholders on August 16.

Other investors have seemed sceptical of the bid, which needs 75 per cent support to pass.

Three per cent shareholder J O Hambro appeared to suggest Morrisons should hold out for bids around 270p-a-share.

Legal and General, which has a 2.8 per cent stake, criticised private equity buyers who would take over Morrisons for the “wrong reasons”.

If the Fortress agreement falls through, it may increase its offer or a rival buyer may emerge.

Buyout firm Clayton, Dubilier & Rice has until August 9 to improve a £5.5 billion bid it made last month.

Sources believe it is working on a new offer.

Potential buyer Apollo recently pulled out of the expected Morrisons bidding war and has tried to join the Fortress-led investment consortium.

Although Silchester generally keeps a low profile, it has spoken out against deals in the past.

Two years ago it raised alarms about a £4 billion buyout of Cobham, the defence and aerospace company, by the US private equity firm Advent.

The news came after former deputy prime minister Michael Heseltine said the Morrisons sale was “another example of a company going to the knacker’s yard”.

Critics believe the supermarket could face the same fate as Debenhams, which eventually collapsed after falling into private equity hands.

with PA Wires

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