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Majestic Wine owner bids for supermarket Morrisons

Fortress Investment Group, the American private equity owner of Majestic Wines, has put in a £6.3 billion bid for UK supermarket Morrisons.

The bid was made over the weekend, but another US firm Apollo Global management, is considering a possible counter offer.

Fortress Investment Group bought Majestic Wine in 2019, for £95 million, which was the company’s first entry into the UK retail sector.

‘No approach has been made to the board of Morrisons,’ Apollo said in a statement. ‘There can be no certainty that any offer will be made, nor as to the terms on which any such offer might be made.’

Chris Elliott, Head of Market Insights at Edge by Ascential, said: ‘Private Equity firms have increasingly been pursuing takeovers of UK companies since the start 2021 as the lingering effects of Brexit and Covid-19 have suppressed the valuations of UK-listed companies, making them look very attractive.

‘Private equity firms, such as Fortress, have also accumulated more money to spend on new deals throughout the pandemic, making this sort of takeover possible.’

Morrisons owns the majority of its stores – 85% of nearly 500 stores and has 19 mostly freehold manufacturing sites – and Fortress has made a point of promising to not sell off the Morrisons stores through sale and leasebacks, using its ownership of Majestic as an example.

‘Majestic Wine retains ownership of a significant freehold store estate and has not sold any of its freehold or long-leasehold properties under Fortress’s ownership,’ it said in a statement.

Amazon potential

‘With Apollo considering a bid, there is still one unanswered question of whether Amazon will enter the fray. Amazon and Morrisons have had a partnership since 2016 and there has always been speculation that Amazon would bid for the supermarket to significantly expand its grocery offering,’ said Elliot.

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