Tag Archives: FIN

Business

Tencent snaps up British video game developer Sumo in $1.3 bln deal

Leave a comment

  • Shares surge in early trading to all-time high
  • Tencent offers 513p per Sumo share
  • Sumo boss says he is keen work with Tencent

July 19 (Reuters) – China’s Tencent (0700.HK) will buy British videogame developer Sumo (SUMO.L) in a $1.27 billion deal, it said on Monday, adding new titles to its growing portfolio of chart-topping videogames.

The purchase, which will boost the Chinese internet giant’s presence globally, brings together Sumo’s racing and snooker games with Tencent’s more high-profile range of games that includes Call of Duty’s mobile version.

Shareholders in Sheffield-based Sumo will get 513 pence in cash per share, a 43% premium to the last price and valuing the company at 919 million pounds, Tencent said, sending Sumo’s shares surging 42% to a record high.

The deal comes days after China’s market regulator decided to block Tencent’s plans to merge videogame streaming sites, Huya (HUYA.N) and DouYu, on antitrust grounds.

It is the second major deal involving a British video game company over the past year, following U.S. video game maker Electronic Arts’ (EA.O) deal to buy Britain-based Codemasters. read more

Tencent, with stakes in companies that make Fortnite and League of Legends, is the world’s second-largest videogame group by revenue after Sony.

“Chinese deals may imply a higher regulatory risk, but we see no likely resistance or counterbid,” Jefferies analysts said.

EXPERTISE AND RESOURCES

Sumo, which counts Microsoft’s Xbox, Amazon Game Studios, Apple, Google and BBC as its clients and partners, has seen its value soar since a 2017 listing on LSE’s junior market AIM at 100 pence.

“The Board of Sumo firmly believes the business will benefit from Tencent’s broad videogaming eco-system, proven industry expertise and its strategic resources,” non-executive chairman Ian Livingstone said.

Tencent owns 8.75% and is the second-biggest shareholder in Sumo, which has 14 studios in five countries and released the video games including Hotshot Racing, Sackboy: A Big Adventure and WST Snooker last year.

Sumo’s boss Carl Cavers said he and co-founders Paul Porter and Darren Mills would reprise their roles.

“The opportunity to work with Tencent is one we just couldn’t miss,” said Cavers, who founded the company 18 years ago.

($1 = 0.7261 pounds)

Reporting by Muvija M in Bengaluru; Editing by Arun Koyyur and Edmund Blair

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

Walmart’s Flipkart says Indian probe shouldn’t treat it the same as Amazon

Leave a comment

A mobile phone showing an image of Indian online retailer Flipkart is seen in front of a Walmart Inc logo displayed in this illustration picture taken July 14, 2021. REUTERS/Florence Lo/Illustration

NEW DELHI, July 18 (Reuters) – Walmart’s (WMT.N) Flipkart should not be treated the same as rival Amazon (AMZN.O) in an Indian antitrust probe as the evidence against the two firms was “qualitatively different”, Flipkart argued in a court filing seen by Reuters.

Both Amazon and Flipkart have challenged the Competition Commission of India (CCI) in court as they seek revocation of an Indian court’s June decision to allow an antitrust probe against them to continue. The companies deny any wrongdoing. read more

India’s government has called the U.S. firms arrogant and accused them of using legal routes to stall the investigation.

In final submissions made to a court in southern India’s Karnataka state, the Walmart unit argued that CCI and the court “confuse the facts” between the case of Amazon and Flipkart, and overlooked that they were “fierce competitors”.

To back its arguments, it said that a business agreement examined by the CCI before ordering its probe was only between Amazon and its sellers, and there was no such evidence against the Walmart unit.

“The allegations and the evidence before the CCI against the Appellant were qualitatively different from those relating to Amazon … The CCI should have independently examined the case against each of the two platforms,” Flipkart said in its 46-page submission, which was not public.

The Indian court is likely to pass a written order on the appeals in coming days.

Flipkart and Amazon did not immediately respond to a request for comment. The CCI didn’t respond outside regular business hours on Sunday.

For years, Amazon and Flipkart have denied allegations from brick-and-mortar retailers about circumventing Indian law by creating complex business structures.

Trade minister Piyush Goyal last month lashed out on U.S. e-commerce giants for filing legal challenges and failing to comply with the CCI’s probe, saying “if they have nothing to hide … why don’t they respond to the CCI?”

In February, a Reuters investigation based on internal Amazon documents showed the U.S. firm for years had helped a small number of sellers prosper on its platform in India, using them to bypass foreign investment laws. Amazon also has indirect equity stakes in two of its big online sellers, Cloudtail and Appario, which get “subsidized fees”, Reuters reported.

The Walmart unit argued in its submission that “unlike in the case of Amazon”, there were no structural links of any kind between Flipkart and its sellers.

Flipkart “ought to have been treated differently from Amazon,” it said.

Amazon and Flipkart are leading players in an e-retail market India forecasts will be worth $200 billion by 2026.

Reporting by Aditya Kalra in New Delhi and Abhirup Roy in Mumbai;

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

Amazon restores service after global outage

Leave a comment

July 12 (Reuters) – Amazon.com Inc (AMZN.O) said its online stores had returned to normal services after a global outage disrupted shopping on its country sites.

According to outage monitoring website Downdetector, services were disrupted for nearly two hours and at the peak of the disruption, more than 38,000 user reports indicated issues with Amazon’s online stores. They occurred on Sunday evening in the United States and Monday morning for much of the rest of the world.

“Some customers may have temporarily experienced issues while shopping. We have resolved the issue, and everything is now running smoothly,” an Amazon spokesperson said.

The spokesperson declined to comment on the reason for the outage.

It was the second broad disruption since late June when users experienced a brief outage on Amazon platforms including Alexa and Prime Video before services were restored. read more

Reporting by Radhika Anilkumar, Sneha Bhowmik and Shubham Kalia in Bengaluru; Editing by Arun Koyyur and Edwina Gibbs

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

World

Canada judge won’t allow Huawei CFO to use HSBC documents in U.S. extradition case

Leave a comment

VANCOUVER, July 9 (Reuters) – A Canadian judge has denied Huawei Chief Financial Officer Meng Wanzhou’s application to add a trove of documents her legal team received from HSBC as evidence to her U.S. extradition case, the judge announced on Friday.

Meng, 49, is facing extradition from Canada to the United States on charges of bank fraud for allegedly misleading HSBC about Huawei’s business dealings in Iran, potentially causing the bank to break U.S. sanctions. She has been held under house arrest in Vancouver since December 2018, when she was first detained.

Her legal team received over 300 pages of internal documents from HSBC through a court on Hong Kong, which the defence argued should be entered as evidence because they would disprove the basis for the United States’ extradition claim. read more

Associate Chief Justice Heather Holmes, who has been overseeing the case in the British Columbia Supreme Court since its inception, disagreed. Her reasons will be released in writing in approximately ten days, Holmes said.

“We respect the court’s ruling, but regret this outcome,” Huawei Canada said in a statement released after the ruling, insisting that the documents showed HSBC was aware of Huawei’s business dealings in Iran, proving that the United States’ account of the case was “manifestly unreliable.”

The Canadian government did not immediately respond to a request for comment.

Meng is set to appear in court in early August. Her extradition hearings are scheduled to finish by the end of that month.

Reporting by Moira Warburton in Vancouver; editing by Diane Craft

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

Musk trial asks the $2 bln question: Who controls Tesla?

Leave a comment

July 9 (Reuters) – Does Elon Musk control Tesla Inc (TSLA.O) or does Tesla control Elon Musk?

More than $2 billion hinges on that question as a trial kicks off on Monday. Shareholders allege that Musk used his control of Tesla to force the company in 2016 to rescue SolarCity, saving the solar panel maker – and Musk’s investment in the company – from bankruptcy.

The union pension funds and asset managers leading the case want Musk to repay to Tesla the cost of the $2.6 billion deal and to disgorge the profits on his SolarCity stock. If they win, it would be one of the largest judgments against an individual.

The two-week trial in the Court of Chancery in Wilmington, Delaware, will boil down to whether Musk, who owned about 22% of Tesla at the time of the deal, is that rare controlling stockholder who does not hold a majority stake.

“I think it’s going to be very hard for the court to ignore the reality that Elon Musk is Elon Musk and his relationship with Tesla,” said Ann Lipton, a professor at Tulane University Law School.

She said the case might present an unusual situation given Musk’s celebrity status, his personal ties to Tesla board members and those board members’ financial ties to SolarCity.

“Put it all together, and it might be enough to count as a controlling shareholder,” she said.

Few executives dominate their company’s image as much Musk, known for taunting regulators, battling naysayers and personally engaging with his 57 million Twitter followers.

“We are highly dependent on the services of Elon Musk, Technoking of Tesla and our Chief Executive Officer,” said Tesla’s 2020 annual report.

Plaintiffs allege that Musk drove the negotiations and even pushed Tesla’s board to raise, not lower, the price for SolarCity.

A higher price benefited Musk, who was the largest shareholder of SolarCity, with a stake of about 22%, as well as four members of Tesla’s board, who directly or indirectly owned SolarCity stock, according to court records.

Board members settled allegations against them last year for $60 million and did not admit to any fault.

Plaintiffs also allege the deal benefited two of Musk’s cousins who founded SolarCity, saving a company that was rapidly running low on cash.

Musk has said he was “fully recused” from board negotiations and that shareholders voted to approve the deal because it was central to his “Master Plan, Part Deux” that aims to integrate sustainable solar energy with electric self-driving cars.

He has said that what plaintiffs see as evidence of control is little more than strong management.

“Taken to its natural conclusion, virtually all ‘hands-on’ and ‘inspirational’ CEOs with minority stock ownership would be deemed controllers,” Musk’s lawyers wrote in a court filing.

If Vice Chancellor Joseph Slights determines Musk was a controlling shareholder, it will fall to Musk to prove the SolarCity deal met the high bar of the “entire fairness” standard, which examines process and price, said legal experts.

Musk has noted in court papers that the SolarCity deal has been a huge success for Tesla shareholders, demonstrating the deal was not only fair, but a boon. After Tesla split its stock 5-1 in 2020, it has risen to $652 on Thursday from near $37 a share when the deal closed in November 2016.

“If the vice chancellor thinks this deal was awful and was not effectively negotiated on behalf of the company, he’ll strike it down,” said Larry Hamermesh, a professor at Delaware Law School.

Reporting by Tom Hals in Wilmington, Delaware, and Sierra Jackson in New York;
Editing by Noeleen Walder and Dan Grebler

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

EU fines Volkswagen, BMW $1 bln for emissions cartel

Leave a comment

  • Sets precedent by applying antitrust law to technical talks
  • Daimler gets off fine after blowing whistle on cartel
  • VW considering taking legal action
  • BMW says cleared of suspicion of emissions cheating

BRUSSELS, July 8 (Reuters) – The European Commission fined German carmakers Volkswagen and BMW a total of 875 million euros ($1 billion) on Thursday for colluding to curb the use of emissions cleaning technology they had developed.

The case, separate to the so-called ‘Dieselgate’ scandal over software designed to cheat on vehicle emissions tests, sets a precedent by extending the application of European competition law to technical-level talks between industry players.

In this case, talks held a decade ago centred on design standards for AdBlue, an additive used to cleanse nitrogen oxide from the exhaust gases produced by diesel-powered cars.

“This is a first,” European Union antitrust chief Margrethe Vestager told a news conference in Brussels. “We have never had a cartel whose purpose was to restrict the use of novel technology.”

Under a settlement, Volkswagen (VOWG_p.DE) will pay a fine of 502 million euros and BMW (BMWG.DE) 373 million euros. Daimler, also part of the cartel, was not fined after revealing its existence.

Vestager said the German carmakers, which included VW units Audi (AUDVF.PK) and Porsche (PSHG_p.DE), had possessed the technology to reduce harmful emissions more than required under EU law but avoided competing to do so.

“So today’s decision is about how legitimate technical cooperation went wrong. And we do not tolerate it when companies collude,” said Vestager.

The EU had narrowed the original scope of its investigation to ensure its charges stuck.

IS TECHNICAL COLLUSION POSSIBLE?

Vestager said that all of the parties had agreed to settle the case and “have acknowledged their role in this cartel”.

Volkswagen, however, said it was considering whether to take legal action, saying the penalty over technical talks about emissions technology set a questionable precedent. read more

“The Commission is entering new judicial territory, because it is treating technical cooperation for the first time as an antitrust violation,” Volkswagen said, adding that the fines had been set even though no customers had suffered any harm.

The nub of the carmakers’ complaints boil down to whether setting common technical standards amounts to anti-competitive behaviour – or whether indeed it makes it easier for an industry as a whole to embrace new technology.

The Commission said in its 2019 charge sheet that the German carmakers had colluded to restrict the size of AdBlue tanks between 2006 and 2014, thus making the urea-based additive less convenient to use.

BMW noted in its defence that it had been cleared of suspicion of using illegal ‘defeat devices’ to cheat emissions tests. read more

“This underlines that there has never been any allegation of unlawful manipulation of emission control systems by the BMW Group,” BMW said in a statement.

In the Dieselgate scandal, VW admitted to using such defeat devices, leading to more than 32 billion euros ($38 billion) in vehicle refits, fines and legal costs for the Wolfsburg-based carmaker.

($1 = 0.8460 euros)

Editing by John Chalmers, Douglas Busvine, Maria Sheahan, Elaine Hardcastle

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

French champagne industry group fumes over new Russian champagne law

Leave a comment

PARIS/MOSCOW, July 5 (Reuters) – France’s champagne industry group on Monday blasted a new Russian law forcing foreign champagne producers to add a “sparkling wine” reference to their bottles and called for champagne exports to Russia to be halted.

The law, signed by Russian President Vladimir Putin on Friday, requires all foreign producers of sparkling wine to describe their product as such on the label on the back of the bottle — though not on the front — while makers of Russian “shampanskoye” may continue to use that term alone.

The French champagne industry group called on its members to halt all shipments to Russia for the time being and said the name “champagne”, which refers to the region in France the drink comes from, had legal protection in 120 countries.

“The Champagne Committee deplores the fact that this legislation does not ensure that Russian consumers have clear and transparent information about the origins and characteristics of wine,” group co-presidents Maxime Toubart and Jean-Marie Barillere said in a statement.

French Trade Minister Franck Riester said he was tracking the new Russian law closely, in contact with the wine industry and France’s European partners.

“We will unfailingly support our producers and French excellence,” he said on Twitter.

Moet Hennessy, the LVMH-owned French maker of Veuve Clicquot and Dom Perignon champagnes, said on Sunday it would begin adding the designation “sparkling wine” to the back of bottles destined for Russia to comply with the law.

LVMH (LVMH.PA) shares were down around 0.2% on Monday afternoon, underperforming the Paris bourse, which was up 0.34%.

Shares in Russian sparkling wine maker Abrau-Durso (ABRD.MM) were up more than 3% after rising as much 7.77% in early trade.

Abrau-Durso president Pavel Titov told Radio France Internationale on Saturday his firm does not have sparkling wines that would be called “champagne” in its portfolio and said he hoped the issue would be resolved in favor of global norms and standards.

“It is very important to protect the Russian wines on our market. But the legislation must be reasonable and not contradict common sense … I have no doubts that the real champagne is made in the Champagne region of France,” he said.

Reporting by Sudip Kar-Gupta and Leigh Thomas in Paris and Alexander Marrow in Moscow;
Writing by Geert De Clercq
Editing by Alison Williams, Andrea Ricci and Catherine Evans

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

Sydney Airport gets $16.7 bln buyout bid as investors take longer-term view on travel

Leave a comment

  • IFM, QSuper, Global Infrastructure Partners behind offer
  • Cash offer at 42% premium to last closing price on Friday
  • Offer contingent on UniSuper reinvesting 15% equity stake

SYDNEY, July 5 (Reuters) – A group of infrastructure investors has proposed a $22.26 billion ($16.7 billion) buyout of Sydney Airport Holdings Pty Ltd (SYD.AX), the operator of Australia’s biggest airport, taking a longer-term view on the pandemic-battered travel sector.

Record-low interest rates have led pension funds and their investment managers to chase higher yields. The purchase, with an enterprise value of A$30 billion including debt, would allow them to reap financial benefits when borders reopen and travel demand rebounds.

If successful, the deal would be Australia’s biggest this year, eclipsing the $8.1 billion spin-off of Endeavour Group Ltd (EDV.AX) and Star Entertainment Group Ltd’s (SGR.AX) $7.3 billion bid for Crown Resorts Ltd (CWN.AX).

The Sydney Aviation Alliance – a consortium comprising IFM Investors, QSuper and Global Infrastructure Partners – has offered A$8.25 per Sydney Airport share, a 42% premium to the stock’s Friday close.

The news sent the stock up as much as 38% to A$8.04 in early Monday trade, though it later retreated to around A$7.55, indicating market uncertainty as to whether the deal will succeed.

Sydney Airport noted the offer was below its pre-pandemic share price and said it would review the proposal, which is contingent on granting due diligence and recommending it to shareholders in the absence of a superior offer.

The airport operator’s share price hit a record A$8.86 in January last year, before the novel coronavirus pandemic led to a collapse in travel demand.

The company is Australia’s only listed airport operator. A successful deal would bring its ownership in line with the country’s other major airports which are owned by consortia of infrastructure investors, primarily pension funds.

Australia’s mandatory retirement savings system, known as superannuation, has assets of A$3.1 trillion, according to the Association of Superannuation Funds of Australia.

With record-low interest rates, funds are looking at infrastructure investments for higher yields.

“It’s the right timing to be looking at these assets which have got a 75-year life when conditions are arguably at the bottom,” said a Sydney Airport investor who declined to be named because the person’s firm was still assessing the proposal. “It’s opportunistic in that regard, but understandable.”

Australia’s international borders are widely expected to remain closed until at least the end of the year due partly to a slower vaccination programme than in most developed countries. read more

Domestic travel has also been disrupted by a two-week lockdown in Sydney during the normally busy school holiday period, after an outbreak of the highly contagious Delta variant of COVID-19. Other states have closed borders to Sydney residents.

In May, Sydney Airport’s international traffic was down more than 93% versus the same month of 2019, while domestic traffic was down 39.2%. read more

The airport has long held a monopoly on traffic to and from Australia’s most populous city, but that is due to end in 2026 with the opening of Western Sydney Airport.

Sydney Aviation Alliance said it did not anticipate making substantive changes to the airport’s management, services, operations or target credit ratings.

The consortium said its members invest directly or indirectly on behalf of more than 6 million Australians and collectively have more than A$177 billion of infrastructure funds under management globally, including stakes in 20 airports.

IFM holds stakes in major airports in Melbourne, Brisbane, Perth and Adelaide. QSuper owns a stake in Britain’s Heathrow Airport whereas Global Infrastructure is invested in that country’s Gatwick and London City airports.

Their offer is contingent on UniSuper, Sydney Airport’s largest shareholder with a 15% stake, agreeing to reinvest its equity interest for an equivalent equity holding in the consortium’s vehicle.

UniSuper, which also holds stakes in Adelaide and Brisbane airports, said it was not a consortium partner nor privy to any details outside information disclosed publicly.

“UniSuper does however, in-principle, see merit in Sydney Airport being converted from a publicly listed company to an unlisted company. UniSuper also has a favourable view of the consortium partners,” the fund said.

($1 = 1.3294 Australian dollars)

Reporting by Jamie Freed in Sydney and Scott Murdoch in Hong Kong; Additional reporting by Byron Kaye in Sydney and Nikhil Kurian Nainan and Soumyajit Saha in Bengaluru; Editing Stephen Coates and Christopher Cushing

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

EXCLUSIVE Amazon, Tata say Indian govt e-commerce rules will hit businesses -sources

Leave a comment

NEW DELHI, July 3 (Reuters) – Amazon.com Inc (AMZN.O) and India’s Tata Group warned government officials on Saturday that plans for tougher rules for online retailers would have a major impact on their business models, four sources familiar with the discussions told Reuters.

At a meeting organised by the consumer affairs ministry and the government’s investment promotion arm, Invest India, many executives expressed concerns and confusion over the proposed rules and asked that the July 6 deadline for submitting comments be extended, said the sources.

The government’s tough new e-commerce rules announced on June 21 aimed at strengthening protection for consumers, caused concern among the country’s online retailers, notably market leaders Amazon and Walmart Inc’s (WMT.N) Flipkart.

New rules limiting flash sales, barring misleading advertisements and mandating a complaints system, among other proposals, could force the likes of Amazon and Flipkart to review their business structures, and may increase costs for domestic rivals including Reliance Industries’ (RELI.NS) JioMart, BigBasket and Snapdeal. read more

Amazon argued that COVID-19 had already hit small businesses and the proposed rules will have a huge impact on its sellers, arguing that some clauses were already covered by existing law, two of the sources said.

The sources asked not to be named as the discussions were private.

The proposed policy states e-commerce firms must ensure none of their related enterprises are listed as sellers on their websites. That could impact Amazon in particular as it holds an indirect stake in at least two of its sellers, Cloudtail and Appario.

On that proposed clause, a representative of Tata Sons, the holding company of India’s $100 billion Tata Group, argued that it was problematic, citing an example to say it would stop Starbucks (SBUX.O) – which has a joint-venture with Tata in India – from offering its products on Tata’s marketplace website.

The Tata executive said the rules will have wide ramifications for the conglomerate, and could restrict sales of its private brands, according to two of the sources.

Tata declined to comment.

The sources said that a consumer ministry official argued that the rules were meant to protect consumers and were not as strict as those of other countries. The ministry did not respond to a request for comment.

A Reliance executive agreed that the proposed rules would boost consumer confidence, but added that some clauses needed clarification.

Reliance did not respond to request for comment.

The rules were announced last month amid growing complaints from India’s brick-and-mortar retailers that Amazon and Flipkart bypass foreign investment law using complex business strcutures. The companies deny any wrongdoing.

A Reuters investigation in February cited Amazon documents that showed it gave preferential treatment to a small number of its sellers and bypassed foreign investment rules. Amazon has said it does not give favourable treatment to any seller.

The government will soon issue certain clarifications on the foreign investment rules, Indian commerce minister Piyush Goyal told reporters on Friday.

Reporting by Aditya Kalra in New Delhi;
Editing by Euan Rocha and Louise Heavens

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

Britain’s Morrisons agrees $8.7 bln offer from Fortress-led group

Leave a comment

A Morrisons store is pictured in St Albans, Britain, September 10, 2020. REUTERS/Peter Cziborra//File Photo

  • Fortress-led group offers 254 pence a share
  • Tops CD&R’s proposal of 230 pence
  • Some investors want 270 pence
  • Morrisons says Fortress would be suitable owner
  • Fortress says it will be ‘good steward’

LONDON, July 3 (Reuters) – Morrisons has agreed to a takeover led by SoftBank (9984.T) owned Fortress Investment Group, valuing Britain’s fourth largest supermarket chain at 6.3 billion pounds ($8.7 billion) and topping a rival proposal from a U.S. private equity firm.

The offer from Fortress, along with Canada Pension Plan Investment Board and Koch Real Estate Investments, exceeds a 5.52 billion pound unsolicited proposal from Clayton, Dubilier & Rice (CD&R), which Morrisons (MRW.L) rejected on June 19. read more

Including Morrisons’ net debt of 3.2 billion pounds, Fortress’ offer gives the group an enterprise value of 9.5 billion pounds.

“We have looked very carefully at Fortress’ approach, their plans for the business and their overall suitability as an owner of a unique British food-maker and shopkeeper with over 110,000 colleagues and an important role in British food production and farming,” said Morrisons Chairman Andrew Higginson.

“It’s clear to us that Fortress has a full understanding and appreciation of the fundamental character of Morrisons.”

The Fortress deal underlines the growing appetite from private funds for British supermarket groups, seen as attractive because of their cash generation and freehold assets.

Fortress, an independently-operated subsidiary of Japan’s SoftBank Group Corp, is a global investment manager with about $53 billion in assets under management as of March. It purchased British wine seller Majestic Wine in 2019.

“We are committed to being good stewards of Morrisons to best serve its stakeholder groups, and the wider British public, for the long term,” said managing partner, Joshua A. Pack.

Fortress intends to retain Morrisons’ existing management team led by CEO David Potts and execute its existing strategy. It said it was not planning any material store sale and leaseback transactions.

RECOMMENDATION

Under the terms of the deal, which Morrisons’ board is recommending to shareholders, investors would receive 254 pence a share, comprising 252 pence in cash and a 2 pence special cash dividend. CD&R’s proposal was 230 pence a share, worth 5.52 billion pounds.

Last week JO Hambro, a top ten shareholder in Morrisons, said any suitor for the group should offer about 270 pence a share or 6.5 billion pounds. read more

Morrisons, based in Bradford, northern England, started out as an egg and butter merchant in 1899. It now only trails market leader Tesco (TSCO.L), Sainsbury’s (SBRY.L) and Asda in annual sales.

Morrisons owns 85% of its nearly 500 stores and has 19 mostly freehold manufacturing sites. It is unique among British supermarkets in making over half of the fresh food it sells.

It said the Fortress offer represented a premium of 42% to its closing share price of 178 pence on June 18 – the day before CD&R’s proposal. The stock closed at 243 pence on Friday.

Morrisons’ directors, who own 0.23% of the group’s equity, would make 14.3 million pounds from selling their shares to Fortress.

CD&R, which under British takeover rules has until July 17 to come back with a firm offer, had no immediate comment.

Morrisons has a partnership agreement with Amazon (AMZN.O) and there has been speculation it too could emerge as a possible bidder.

FIVE PROPOSALS

Morrisons said an initial unsolicited proposal was received from Fortress on May 4 at 220 pence a share. This offer was not made public. Fortress then made four subsequent proposals before it offered a total value of 254 a share on June 5.

The bids for Morrisons follow February’s purchase by Zuber and Mohsin Issa and private equity firm TDR Capital of a majority stake in Asda from Walmart (WMT.N). The deal valued Asda at 6.8 billion pounds. read more

That transaction followed Sainsbury’s failure to take over Asda after an agreed deal was blocked by Britain’s competition regulator in 2019.

In April, Czech billionaire Daniel Kretinsky raised his stake in Sainsbury’s to almost 10%, igniting bid speculation.

read more

($1 = 0.7235 pounds)

Reporting by James Davey; Editing by Jane Merriman

Our Standards: The Thomson Reuters Trust Principles.

Read original article here