Wm Morrison debt sale gets underway - report
By Abigail Townsend
Date: Wednesday 02 Feb 2022
(Sharecast News) - Banks involved in last year's acquisition of Wm Morrison have privately sold £1.2bn of the supermarket chain's riskiest class of debt, it was reported on Wednesday, as part of a wider £6.6bn debt package.
According to Bloomberg, citing people familiar with the matter, Goldman Sachs, BNP Paribas, Bank of America and Mizuho have privately sold £500m junior secured notes and £700m in Euro-denominated junior secured notes to credit funds.
Pre-marketing talks will now begin with select investors next week, Bloomberg added, ahead of the sale of the senior notes launching to the wider market later this month.
US private equity firm Clayton, Dubilier & Rice secured Morrisons in October 2021 following a four-month takeover battle. Its final bid of £9.97bn including debt, or 287p per share, beat the 286p offered by Fortress Investment, which is owned by Japanese conglomerate Softbank.
It is now seeking to raise a total of £6.6bn in debt to finance the deal, the largest leveraged buyout of a British company in more than a decade.
The decision by Morrisons' banks to bypass public markets for the junior notes was a sign of diminished risk tolerance among investors, Bloomberg said. In a private transaction, buyers may not always get the best price, but the volatility typically associated with a sale on the open market is reduced.
Neither the banks involved nor CD&R have commented on the report.
CD&R advisor Terry Leahy, the former head of Tesco, now chairs the grocer, the UK's fourth-largest supermarket chain.
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