LONDON: Wm Morrison Supermarkets Plc set an Oct 19 deadline for shareholders to vote on the hotly contested ￡7bil (US$9.6bil or RM40.21bil) takeover proposal by United States private equity firm Clayton Dubilier & Rice LLC (CD&R).

       Britain’s fourth-largest grocer published documents saying when shareholders will decide the outcome of what could be the country’s largest take-private deal in a decade.

       A vote of 75% or more is required for CD&R’s deal to go through.

       However, CD&R could still face a late challenge from a consortium led by Fortress Investment Group.

       The group has been pursuing the grocer throughout the summer and hasn’t yet declared whether it’s walking away.

       Morrison said in the document that as neither CD&R nor Fortress had declared its offer final, “a competitive situation” existed.

       As a result, there will likely be an auction to resolve the matter, it added.

       It’s expected the Takeover Panel, a body that oversees United Kingdom takeover transactions, will announce the terms of the auction process soon.

       The fight for Morrison reflects the continued interest in Britain’s supermarkets following the ￡6.5bil (RM37.26bil) buyout of Asda, the UK’s third-largest grocer, earlier this year.

       Private equity investors want to capitalise on the improving fortunes of leading chains after lockdowns triggered a surge of in-store and online grocery spending.

       CD&R is being advised on its bid by Terry Leahy, who previously ran Britain’s biggest supermarket chain, Tesco Plc.

       The private equity firm has made pledges to maintain Morrison’s policy on pay and pensions.

       Further, it will support its long-term relationships with British farmers.

       It also promised not to carry out material sales and leasebacks of the grocer’s extensive real estate portfolio.

       Morrison owns most of its 500 stores as well as 14 factories where it makes much of the food it sells.

       The offer from CD&R will be funded with more than ￡3.4bil (RM19.49bil) of equity from funds managed by the private equity firm.

       Debt of about ￡6.6bil (RM37.83bil) will be provided by bridge loans and revolving credit facilities.

       These will be led by Goldman Sachs, Bank of America, Mizuho and BNP Paribas.

       Details in the document showed that CD&R is likely to incur nearly ￡350mil (RM2bil) of fees related to the transaction.

       Most relate to financing costs and broking advice. Morrison’s advisory fees are approaching ￡57mil (RM326.72mil).

       CD&R said that in addition to supporting Morrison’s existing pay and pension arrangements, it’s also agreed to a “comprehensive mitigation package” to provide “additional security and covenant support to the Morrison Pension Schemes”.

       Morrison’s pensions have a surplus of more than ￡700mil (RM4bil) but the trustees have pushed to look in additional security from CD&R.

       The Fortress consortium includes America’s billionaire Koch family, the Canada Pension Plan Investment Board, and Singapore sovereign wealth fund GIC.

       Fortress declined to comment. ―Bloomberg