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Sky: MFG Near £2.5b Deal For Morrisons' Petrol Business

CONSUMER STAPLES SECTOR
  • A Sky News sources piece reports that Motor Fuel Group (MFG) is nearing a £2.5bn deal to acquire Morrisons' petrol forecourts.
  • Both MFG and Morrisons are majority-owned by Clayton Dubilier & Rice (CD&R), an American buyout firm.
  • The deal includes approximately 340 existing Morrisons fuel sites, with an additional 150 sites planned for MFG's EV charging network expansion.
  • Morrisons aims to use a substantial portion of the proceeds to reduce its £5.7bn debt while enhancing Morrisons' investment capacity in its wholesale and convenience sectors.
  • The deal follows regulatory scrutiny over CD&R's £7bn takeover of Morrisons in 2021, with MFG required to sell 87 petrol forecourts to address competition concerns.
  • One Sky source said a deal was expected to be announced by early February.
  • Most of the company’s debt doesn’t appear to be traded aside from three small (illiquid) GBP lines though the company serves as a bellwether for the broader UK retail sector.
  • Morrisons was downgraded to B2[N] by Moody’s in February after poor operational performance in FY22 with Moody’s-adjusted gross EBITDA leverage of 9.1x with projections of 8x and 7.5x for 2023 and 2024 (vs. a 6.5x expectation for a B1 rating).
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