Morrisons backs US firm's improved takeover offer

Supermarket group Morrisons has accepted an improved £7bn takeover bid from US private equity group Clayton, Dubilier & Rice (CD&R).

It means it has dropped its recommendation for investors to accept a previous £6.7bn offer from a consortium led by Fortress Investment.

It's the latest step in a bidding war for the grocer, which has almost 500 shops and more than 110,000 staff.

Sources close to Fortress said it was considering its position.

In July Morrisons turned down an offer worth £5.5bn from CD&R, saying it significantly undervalued the business.

The new offer has been unanimously accepted by the board of the grocer but shareholders will vote on whether to approve it at a meeting in early October.

CD&R said it recognises the "legacy of Sir Ken Morrison [whose father founded the grocer], Morrisons' history and culture, and considers that this strong heritage is core to Morrisons and its approach to grocery retailing".

The private equity firm said it would help Morrisons to build on its strengths, including its close relationships with suppliers and property portfolio.

Over the last 10 years, CD&R has been advised by Sir Terry Leahy, who was the boss of Tesco at the time when Morrisons' chairman Andy Higginson worked for him as chief financial officer.

Sir Terry also advised CD&R on its acquisition of discount retailer B&M, which netted the private equity firm an estimated profit of £1bn when it sold it on.