Bankers and advisers would net £275m from Morrisons takeover

Bankers and advisers are in line for a £275m payday from the proposed takeover of the British supermarket Morrisons, according to newly published documents.

The US private equity firm Fortress aims to take the retailer private by 26 August if it receives shareholder backing for the £6.2bn takeover, a timetable published on Thursday said.

The offer, of 252p a share and a 2p cash dividend, which has been unanimously supported by Morrisons’ board, will require the backing of 75% of shareholder votes to be confirmed at a meeting on 16 August. Shares were trading at 265p on Thursday morning.

The fees for advisers include £169m for financing the deal and £36m for broking advice for Fortress from investment bankers at HSBC and RBC, plus £17m in legal advice, according to the deal’s scheme document. Morrisons will also pay £42m for advice on the bid from Rothschild & Co, Jefferies and Shore Capital.

It would be the second private-equity-backed takeover of a large British supermarket within a few months, after Asda was bought by the Issa brothers and its partner, TDR Capital. Private equity firms are in high demand from investors around the world, and British companies in particular have been in the crosshairs because they are seen as relatively undervalued.

The scheme documents make no mention of Apollo, another US private equity firm that on Tuesday said it would not make its own bid for Morrisons. Apollo is instead trying to get in on the Fortress deal, with talks ongoing. However, it is still possible that the deal could be derailed by another bid. The American private equity firm Clayton Dubilier & Rice is considering making another bid for Morrisons, the Times reported on Tuesday.

Morrisons, whose first supermarket opened in 1961, employs 110,000 people. It has 497 stores and 339 petrol stations, as well as 20 factories and nine distribution centres.

Fortress, which manages assets worth $53bn, will put up 54% of the funding for the takeover, according to the scheme document. It has also received financial backing from the Canada Pension Plan Investment Board, a large pension fund manager that will put up 31%.

The remaining 15% is planned to come from part of the industrial empire of the Koch family, billionaire US oil industrialists who are known for their libertarian and conservative activism. Koch Industries will eventually own 22% of the company buying Morrisons, giving it significant power over one of the UK’s largest employers.