Shareholder dissent grows over Morrisons takeover bid

More shareholders are coming out against a proposed £6.3bn private equity-backed takeover deal for supermarket chain Morrisons.

Money manager M&G said the bid "does not reflect the true value of the company."

It comes after the grocer accepted a takeover bid by a US firm Fortress Investment Group earlier this month.

Earlier this week, Morrisons' largest shareholder Silchester said it was not inclined to support the offer.

Top five shareholder Schroders said on Thursday it was still considering its position, and J O Hambro, which owns a 1.9% stake, has also said that the proposed price per share is too low, according to reports.

Rupert Krefting, head of corporate finance and stewardship at M&G, which owns a 1.08% stake in Morrisons, said that Fortress's proposals could be achieved by the supermarket chain while remaining in public ownership.

"The company has experienced a successful management turnaround over the past five years and has a strong balance sheet," Mr Krefting said.

Silchester International, which owns a 15.14% stake in Morrisons, said on Wednesday that it is "not inclined to support" the agreed deal.

Morrisons shareholders are due to vote on the offer on 16 August.

The current offer by Fortress, which was backed by Morrisons' board of directors, is priced at 252p per share, as well as a conditional special dividend at 2p per share for investors.

Silchester International said there was "little in the recommended offer that could not be achieved by the supermarket as a listed company".

"Silchester encourages Morrisons' board to allow more time to respond to other parties who might offer better value to Morrisons' public shareholders," it added.

The Fortress consortium also comprises Canadian pension fund CPP Investments and Koch Real Estate Investments (KREI), part of US-owned Koch Industries. On Wednesday, Singapore's sovereign wealth fund GIC joined the consortium in the bid for the supermarket chain.

Morrisons, the UK's fourth largest grocer, has almost 500 shops and more than 110,000 staff.

The retailer agreed to the takeover early in July after it turned down an offer worth £5.5bn from a different firm, saying it had significantly undervalued the business.

Morrisons started life as a market stall in Bradford in 1899 but it was not until 1961 that the first supermarket store opened under the name.

In 2004, the group bought rival grocer Safeway for £3bn, giving it a bigger slice of the market in southern England.