Initially, the US investment firm Apollo Global Management, considered making an offer but later backed down to join forces with rival Fortress Investment Group. This consortium allowed them to raise £6.7bn, increasing their previous bid of £6.3bn.

On the 19th of August, Morrisons agreed on a takeover offer of £7bn by the New York private equity firm Clayton, Dubilier & Rice (CD&R). This puts CD&R’s offer at 285p a share, trumping Fortress’ lower offer of 272p per share.

Environment Secretary, Luke Pollard, has previously expressed his worries and questioned the binding of voluntary pledges by Fortress and how it will be enforced.

The Labour MP reviewed the takeover, suggesting that they properly examine the commitments, so that jobs and workers’ rights can be protected and maintain the UK's food security.

'If Morrisons is broken up and pieces of it sold for a quick buck, that could potentially weaken the supply chain and Britain's food security.'

Morrisons is unique, being one of the ‘Big Four’ supermarkets that owns most of their own supply chain with nearly 500 shops and more than 110,000 staff. The discussion of a debt-fuelled private equity takeover by CD&R have caused unions and politicians to grow weary. They fear that companies could be stripped of their property holdings that come with such a large amount of debt, leading to the deterioration of worker conditions and benefits.

CD&R have addressed the worry surrounding pensions, stating that if the sale is successful, the pension rights of all Morrisons’ management team and employees will be “fully safeguarded”. During CD&R’s first discussions with Morrisons’ trustees, the investment firm agreed to provide additional security to current pension schemes through an appropriate mitigation package.

The shift towards online shopping during the pandemic has made it more attractive for acquisition groups to look towards the supermarket sector. 

In October last year, the Issa brothers bought ASDA for £6.8bn along with the private equity company TDR, who among other plans was to improve their online business. 

TDR Capital and the brothers co-own the petrol station operator, EG Group, with over 395 UK petrol stations owned by the Issa brothers in comparison to ASDA’s 323. According to the CMA’s senior director Joel Bamford, this could lead to higher prices for motorists in certain parts of the UK.

Tesco’s shares increased of 5.9% to 234.75p since the Morrisons’ takeover interest was first revealed on the 19th of June. Shares of Marks & Spencer have also gone up by 5.4% to 156.65p in the same period, with grocery considered the group’s key sales growth driver.

However, the supermarket chain that saw the highest rise was Sainsburys, increasing from 7.3% to 279.1p. 

“Sainsbury’s is the second most attractive target,” according to Equity Analyst, Ioannis Pontikis at Morningstar.

There have been speculations on whether or not Sainsbury’s could be sold. Especially since Daniel Kretinsky, the owner of Vesa Equity Investments, increased his company’s stake to 9.99% at Morrisons.

When looking at Tesco, the retailer is too big, and their profit margin improvements are not considered high. Sainsbury’s has less stores than its rivals, which is one of the main attractions for private equity bidders. The retail market has grown very competitive with discounters at one end, and Amazon at another.

Sainsbury’s stores offer more for shoppers; their integration with Argos makes the retailer more attractive. Since November, Sainsbury’s announced a restructure that would see the closure of 420 Argos stores and 3,500 job losses as a result. This change creates a stronger focus on food, home delivery, lowering prices and mini-Argos shops within Sainsbury’s.

Deterrents for potential bidders is actuarial deficit in pensions within the company. Another disincentive is the price match campaign Sainsbury’s has embarked on along with Tesco, which matches prices with discount retailers, Lidl and Aldi, to maintain and attract new shoppers during the pandemic. Continuously lowering prices is not positive in the private equity environment. However, the shift to online shopping has given Sainsbury’s some advantages over discounters.

Fears from customers surrounding their weekly shop for groceries have remained prevalent over the last couple of years. Concerns have grown for workers at Morrisons and members regarding pension schemes, support for their local communities, partner suppliers and farmers. The effect the takeover will have on the UK’s supply chain will depend on the promises made by Morrison’s new owners and regulators ensuring that the agreed commitments are being actioned.