A major shareholder is wavering over plans to take Morrisons private despite the supermarket’s price tag reaching £7 billion.
Legal & General Investment Management (LGIM), the Big 4 grocer’s 11th-largest investor, is still considering commitments about the chain’s “future management”.
However, the group said concerns about Morrisons properties being sold on the cheap had been somewhat relieved.
It comes after the supermarket’s board accepted a 285p-a-share offer from Clayton, Dubilier & Rice, the American private equity firm, last Thursday.
READ MORE: Morrisons bidder to match rival’s property pledges
The move trumped a 272p bid from a consortium led by Majestic Wine owner Fortress, which is expected to respond with an improved offer.
LGIM said last month that it feared Morrisons could be taken over “for the wrong reasons”.
It warned that returns generated by the buyer “should not come from buying its property portfolio too cheaply, levering the company up with debt, and potentially reducing the tax paid to the exchequer”.
Analysts believe the properties, valued by the supermarket at £5.87 billion, could be worth up to £9 billion.
LGIM senior fund manager Andrew Koch claimed yesterday that the Morrisons bidding war showed buyers had “paid close attention” to the property portfolio.
“This gives us some comfort that the true value should be realised for shareholders, including our clients,” he said.
“We continue to look into the other aspects of the bid, including commitments for the future management of the business.”
Clayton, Dubilier and Rice has pledged to safeguard the pension and employment rights at Morrisons, and does not anticipate “any material change” in staff numbers.
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