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    9984   JP3436100006

SOFTBANK GROUP CORP.

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Britain's Morrisons agrees $8.7 billion takeover by Fortress-led group

07/03/2021 | 02:03pm EDT
FILE PHOTO: A Morrisons store is pictured in St Albans

LONDON (Reuters) - Morrisons has agreed to a takeover led by SoftBank owned Fortress Investment Group that values Britain's fourth-largest supermarket chain at 6.3 billion pounds ($8.7 billion) and tops a rival offer from a U.S. private equity firm.

The offer from Fortress, along with Canada Pension Plan Investment Board and Koch Real Estate Investments, exceeds a 5.52 billion pound unsolicited proposal from Clayton, Dubilier & Rice (CD&R), which Morrisons rejected on June 19.

However, it was less than the 6.5 billion pounds asked for by top 10 Morrisons investor JO Hambro last week.

Shareholders will get to vote on the Fortress offer, which gives the supermarket chain an enterprise value of 9.5 billion pounds once its net debt of 3.2 billion is taken into account.

Under British takeover rules CD&R has until July 17 to come back with a firm offer. CD&R declined to comment.

Analysts have also speculated that other private equity groups and Amazon, which has a partnership deal with Morrisons, could enter the fray in a potential bidding war.

The Fortress deal underlines the growing appetite from private funds for British supermarket chains, which are seen as attractive because of their cash generation and freehold assets.

    "We have looked very carefully at Fortress' approach, their plans for the business and their overall suitability as an owner of a unique British food-maker and shopkeeper with over 110,000 colleagues and an important role in British food production and farming," said Morrisons Chairman Andrew Higginson.

"It's clear to us that Fortress has a full understanding and appreciation of the fundamental character of Morrisons."

'GOOD STEWARDS'

Fortress, an independently-operated subsidiary of Japan's SoftBank Group Corp, is a global investment manager with about $53 billion in assets under management as of March. It purchased British wine seller Majestic Wine in 2019.

"We are committed to being good stewards of Morrisons to best serve its stakeholder groups, and the wider British public, for the long term," said managing partner Joshua A. Pack.

But Britain's opposition Labour Party called for close scrutiny from the government.

"Ministers must urgently work with Morrisons and the consortium to ensure that crucial commitments to protect the workforce and the pension scheme are legally binding, and met," said Labour's spokeswoman on business Seema Malhotra.

Fortress intends to retain Morrisons' Bradford, northern England, headquarters and its existing management team led by CEO David Potts and execute its existing strategy. Material store sale and leaseback transactions are not planned.

Potts would make 9.2 million pounds by selling his shares to Fortress, while chief operating officer Trevor Strain would pocket 3.6 million pounds.

Under the terms of the deal, which Morrisons' board is recommending to shareholders, investors would receive 254 pence a share - 252 pence in cash and a 2 pence special cash dividend. CD&R's proposal was 230 pence a share.

Morrisons started out as an egg and butter merchant in 1899. It now only trails UK market leader Tesco, Sainsbury's and Asda in annual sales.

Morrisons owns 85% of its nearly 500 stores and has 19 mostly freehold manufacturing sites. It is unique among British supermarkets in making over half of the fresh food it sells.

It said the Fortress offer represented a premium of 42% to its closing share price of 178 pence on June 18 - the day before CD&R's proposal. The stock closed at 243 pence on Friday.

FIVE PROPOSALS   

Morrisons said an initial unsolicited proposal was received from Fortress on May 4 at 220 pence a share. This offer was not made public. Fortress then made four subsequent proposals before it offered a total value of 254 a share on June 5.

The bids for Morrisons follow February's purchase by Zuber and Mohsin Issa and private equity firm TDR Capital of a majority stake in Asda from Walmart. The deal valued Asda at 6.8 billion pounds.

That transaction followed Sainsbury's failure to take over Asda after an agreed deal was blocked by Britain's competition regulator in 2019.

In April, Czech billionaire Daniel Kretinsky raised his stake in Sainsbury's to almost 10%, igniting bid speculation.

($1 = 0.7235 pounds)

(Reporting by James Davey; Editing by Jane Merriman)

By James Davey


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AMAZON.COM, INC. 0.22% 3483.7 Delayed Quote.5.93%
J SAINSBURY PLC -1.30% 282.7 Delayed Quote.26.70%
SOFTBANK GROUP CORP. -1.39% 6542 End-of-day quote.-18.81%
TESCO PLC 0.96% 257.15 Delayed Quote.10.07%
WM MORRISON SUPERMARKETS PLC 0.17% 291.1 Delayed Quote.63.86%
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Analyst Recommendations on SOFTBANK GROUP CORP.
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Financials
Sales 2022 6 040 B 55 051 M 55 051 M
Net income 2022 1 310 B 11 938 M 11 938 M
Net Debt 2022 14 983 B 137 B 137 B
P/E ratio 2022 8,99x
Yield 2022 0,67%
Capitalization 11 207 B 102 B 102 B
EV / Sales 2022 4,34x
EV / Sales 2023 4,11x
Nbr of Employees 58 786
Free-Float 69,3%
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SoftBank Group Corp. Technical Analysis Chart | 9984 | JP3436100006 | MarketScreener
Technical analysis trends SOFTBANK GROUP CORP.
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Mean consensus BUY
Number of Analysts 15
Last Close Price 6 542,00 JPY
Average target price 10 507,87 JPY
Spread / Average Target 60,6%
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Managers and Directors
Masayoshi Son Chairman & Executive President
Yoshimitsu Goto CFO, Director & Senior Managing Executive Officer
Raul Marcelo Claure Chief Operating Officer & Executive Vice President
Tim Mackey Chief Legal Officer & Group Compliance Officer
Masami Iijima Independent Outside Director
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