LONDON Reuters - The outcome of a $10 billion six-month battle to buy British supermarket chain Morrisons will be decided in a one day auction on Sunday, coordinated by the Takeover Panel.
The shootout will pit U.S. private equity group Clayton, Dubilier and Rice CD&R whose 285 pence share bid was recommended in August by Morrisons Board against a consortium led by Softbank owned Fortress Investment Group.
CD&R is being advised by Terry Leahy, the CEO of Tesco for 14 years to 2011.
In 1899, Bradford, England, based Morrisons started out as an egg and butter merchant in Bradford. It listed its shares in 1967 and is the fourth largest grocer after brands Tesco, Sainsbury's and Asda.
The battle for Morrisons is the most successful case in the UK, where a raft of bids for high-profile British companies this year are expected to be funded by public equity firms.
The Takeover Panel, which governs M&A deals in the UK, moved to an auction process because neither suitor has declared their offer final.
The contest will consist of a maximum of five rounds.
In the first round either suitor may increase their bid. If neither is accepted, CD&R's already agreed offer wins.
In the event of a higher bid in one round, the other suitor can raise a bid to his own in three subsequent rounds.
If there is still no winner, both offerors might make an increased bid in a fifth and final round.
To draw a draw any fifth round offer by Fortress must be at an odd number of pence, while CD&R must bid at an even number of pence.
After the auction has closed, the panel will make a statement on Saturday.
Morrisons has until Tuesday to make its recommendation, but could make a statement as early as Saturday after its board meets after the auction.
Given that the board has previously agreed offers from both parties it is expected to recommend shareholders accept the highest bid at a shareholder meeting planned for October 19.
Both CD&R and Fortress have committed to retain Morrisons Bradford headquarters and its existing management team led by CEO David Potts, execute its strategy, not sell its freehold store estate and maintain staff pay rates. However, the commitments are legally not binding.
A victory for CD&R would reunite Andrew Higginson with Potts and Morrisons chairman Leahy, two of his closest lieutenants at Tesco.
Potts, who joined Tesco as a 16-year-old shelfstacker, will earn more than 10 million pounds from selling his Morrisons shares to the victor.