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Major Morrisons shareholder not inclined to support Fortress merger

Major Morrisons shareholder not inclined to support Fortress merger
Major Morrisons shareholder not inclined to support Fortress merger

Silchester Asset Management, the largest shareholder in WM Morrisons (MRW.L), has reportedly stated that it is not inclined to support the £6.3 billion planned takeover offer from US-based private equity company, Fortress Investment Group.

According to reports, the deal could face the risk of cancellation after Silchester put out this statement. The company holds a 15% stake in Morrisons, the fourth largest supermarket chain in the United Kingdom.

The lack of support from such a large stakeholder might make it challenging for the proposed acquisition to obtain required approvals from investors, who hold 75% of Morrisons shares, during a vote on 16th of August.

The investment management firm stated that Morrisons' board, which endorsed the Fortress offer earlier this month, should give additional time to more effectively respond to offers from other parties who could provide better value to the public shareholders of Morrisons.

It went on to add that there was little in the proposed and recommended takeover offer that Morrison, as a public business, could not achieve.

The criticisms arose when the UK's largest asset manager, Legal & General Investment Management, cautioned that private equity companies should not be permitted to takeover Morrisons for the wrong purposes.

LGIM advised that potential bidders would be wrong to benefit from Morrisons' probably undervalued property holdings, load it up with debt, or reduce its tax liability.

Morrisons shareholders will vote on the offer made by Fortress in August, only a week after the supposed deadline for competitor bidder Clayton, Dubilier & Rice (CD&R), an American private equity firm, to submit a potentially better offer.

CD&R began the bidding procedure with a 230p-per-share offering, which the board of Morrisons rejected by labeling it as insufficient before accepting the Fortress offer.

Apollo Global Management, a third prospective buyer, has stated that it no longer intends to make its own proposal for Morrisons but is in talks with Fortress.

Morrisons' stock is now trading at 266p, indicating that investors are anticipating a higher offer to emerge from the ongoing process.

Source credit: https://www.theguardian.com/business/2021/jul/27/morrisons-biggest-shareholder-inclined-not-to-back-takeover-bid

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