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 The founding family of Morrisons, which own a 9.5 percent stake, has
contacted buyout firms to guage their interest in taking the
business private after a fall in Christmas sales.
Cash-rich private equity firms are keen to do new buyouts after low
levels of M&A activity in 2013, although the large size of this deal
may mean that they have to work together, bankers said.
"The size of the transaction, which could get as high as 10 billion
pounds, could require a number of private equity players to team up,
given the size of the equity cheque needed," a senior leveraged loan
banker said.
Morrisons declined to comment.
Bradford-based Morrisons, which is the UK's fourth-largest
supermarket operator, was founded in 1899 and listed on the London
Stock Exchange in 1967.
Morrisons, which has lucrative property assets, has already been
considered as a takeover target by CVC, which studied a potential
bid in 2007.
Morrisons' shareholders and retail analysts are doubtful that a
take-private deal will happen but bankers and sponsors have been in
talks for more than a month to see if the financing is theoretically
possible, a second banker said.
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A debt package of around 5 billion pounds would be one of the
largest buyout financings since the financial crisis. A financing
would be a mix of loans and high-yield bonds in sterling, dollars
and euros to maximize liquidity, two bankers said.
The loan component is expected to have an 'opco-propco' structure
which is commonly used on loans for companies with property assets.
Property company debt is serviced with rent payments from an
operating company, they added. ($1 = 0.5989 British pounds)
(Editing by Tessa Walsh)
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