£9.5bn deal to buy Morrisons struck by Fortress

A trio of private investment groups led by SoftBank-owned Fortress have struck a £9.5bn deal to acquire Wm Morrison, Britain’s fourth-largest supermarket chain.

Britain’s fourth-largest supermarket chain is set to be acquired by a trio of investment groups, including Softbank-owned Fortress, Canadian pension fund CPPIB and a unit of Koch Industries for £9.5bn.

The grocer will remain headquartered in Bradford. The new owners have pledged to safeguard pensions for the 111,000 employees and are “fully supportive” of the existing agreement to pay all staff at least £10 an hour.

The deal is set to be the largest UK private equity buyout since KKR bought the pharmacy chain Boots in 2007.

Morrisons’ deal with online giant Amazon is seen to have been a particularly attractive proposition to potential bidders.

Last year the e-commerce giant announced it will offer free grocery deliveries for Prime customers, at the time representing a major step up in competition between the internet giant and UK supermarkets. Amazon Fresh has since expanded to physical stores.

Morrisons is unique among the UK’s largest supermarkets as it is the only one to have its foods stocked by Amazon Fresh, which helped to boost Morrisons’ online sales by 113 per cent in the first quarter of its latest financial year.

Ross Hindle, analyst at Third Bridge, explained that the three brick-and-mortar Amazon Fresh stores in London are all stocked by Morrisons.

“With consumers now well accustomed to online grocery shopping, Amazon has growing expectations for its Fresh concept. Our experts believe this partnership will prove a key differential growth factor for Morrisons,” he added.