MPs ‘to contact competition watchdog’ over Morrisons takeover move

MPs are preparing to write to competition regulators in a bid to secure assurances if the potential £5.5 billion takeover of Morrisons progresses, according to reports.

The Telegraph said it understands that the Business, Energy and Industrial Strategy Committee intends to contact the Competition and Markets Authority over the private equity move.

Earlier this week, Morrisons confirmed that it has rejected a takeover proposal from New York-based firm Clayton, Dubilier & Rice (CD&R).

The revelation sparked a surge in the grocer’s share price, rising by around a third on Monday, and drove speculation that other potential bidders could enter the fray.

The competition watchdog would be expected to look into any takeover were the supermarket chain to accept a takeover offer.

It comes after a group of Labour MPs warned that a private equity takeover of the retailer could threaten the future of thousands of jobs and risk the potential for asset-stripping.

The supermarket group has significant ownership of parts of its supply chain and a large property portfolio which will appeal to possible buyers.

CD&R approached Morrisons last week but has yet to table a formal bid and has until July 17 to confirm a firm intention to make an offer under UK takeover rules.

The UK’s largest asset manager, Legal and General Investment Management (LGIM), also warned that the potential takeover by CD&R would “not be adding any genuine value” to the retailer if a deal was struck.

A senior fund manager at LGIM, which is the seventh-largest shareholder in Morrisons, told the Financial Times: “The (retail) sector generally looks undervalued, and private equity look to be interested in Morrisons partly because it has a lot of freehold property, which they would ‘sale and leaseback’ to generate cash to pay back to themselves.

“That’s not adding any genuine value, and the company could do that themselves.

“So I would personally not expect a bid to succeed at that level.”