Wm Morrison PLC (LON:MRW) has turned down a £5.5bn takeover approach from US private equity firm Clayton, Dubilier & Rice.
An approach was confirmed this weekend and followed an initial contact on (Thursday) 17 June.
In a statement, Morrisons said: “The board of Morrisons evaluated the conditional proposal together with its financial adviser, Rothschild & Co, and unanimously concluded that the conditional proposal significantly undervalued Morrisons and its future prospects.
“Accordingly, the board rejected the conditional proposal on 17 June 2021.”
The supermarket said the offer was priced at 230p per share, valuing it around £5.5bn, and compared to a closing price on Friday of 178.5p.
CD&R counts former Tesco boss Sir Terry Leahy as a consultant and has already been spending heavily this year with a £2.8bn deal for UDG Healthcare, £308mln for Wolesley Plumbing and a joint US$5.5bn deal for US tech firm Cloudera.
Morrisons has previously been tipped as a possible takeover target for online giant Amazon and some observers expect the CD&R move to flush out other interested parties.
The group is the UK’s fourth-largest grocery chain with around 10% of the UK grocery market and employs 110,000 staff.
Tesco and Sainsbury’s are the largest, with Asda, which has just been taken over by the Issa brothers and private equity group TDR, in third.
Under takeover rules CD&R has until 17 July to make a formal offer.
Its approach comes just days after Morrisons suffered one of the biggest investor revolts seen yet in the UK with almost 70% of shareholders voting against a management bonus scheme that stripped out additional coronavirus costs.