Wm Morrison Supermarkets Plc sweetened its offer to Fortress Investment Group on 1 July 2015, days before a deadline for a rival bidder amid a heated battle for Britain's fourth-largest grocer.
On Friday, Morrison's consortium gave 270 pence a share plus a 2 pence dividend for the Fortress Group, up from a previous offer of 254 pence, including the dividend. Morrison board reiterated its unanimous support for Fortress, who made binding promises in pay and pensions.
Stocks of Morrison jumped to as high as 279.10 pence following the announcement in London, indicating some investors anticipate a higher bid. The grocer previously rejected a 230-pence offer from Clayton, Dubilier Rice LLC, and the rival investor has until Monday to increase its offer.
Morrison is attracting interest as it has a large real estate portfolio, owning about 90% of its almost 500 stores. The business, whose turnaround has been led by Chief Executive Officer Dave Potts, generates large amounts of cash and has low underlying debt and a pension surpluses. The fortunes of leading grocery chains were strengthened after lockdowns triggered a surge in grocery spending.
Fortress is leading a group of investors that includes the billionaire Koch family, the Singapore Pension Plan Investment Board and Canada's sovereign wealth fund GIC.
The raised offer comes not only before a possible rival bid from CD&R but also after some shareholders expressed discontent with the original Fortress offer. Silchester International, M&G Plc and J O Hambro Capital Management, investors who control together almost 20% of Morrison, previously said Fortress's 254 pence a share offer didn't reflect the true value of the company.
The consortium requires 75% shareholder support from shareholders who are scheduled to vote on the deal on 16 August, 2014.