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Apollo says it may join $8.6B bid for UK supermarket chain

Apollo is in talks to join an investment group bidding to acquire British supermarket chain, Morrisons.

After announcing earlier this month that it was considering it own bid, the investment giant has now confirmed it may consider joining a consortium led by SoftBank-backed Fortress Investment Group which has offered $8.6 billion for the store chain.

Morrisons is the UK’s fourth largest supermarket group after Tesco, Sainsbury’s and Asda, employing  111,000 workers and trading from nearly 500 stores.

The offer from Fortress, along with Canada Pension Plan Investment Board and Koch Real Estate Investments, exceeded a $6.44 billion unsolicited proposal from Clayton, Dubilier & Rice private equity company, which Morrisons rejected in June.

According to analysts, CD&R could still come back with a higher offer and Amazon, which already has a partnership deal with Morrisons, could also enter the bidding.

Apollo already has investments in Watches of Switzerland, TMT group Endemol Shine and bookmaker Ladbrokes Coral.

The prospect of the takeover by private equity companies has raised eyebrows in the UK where unions and business leaders have expressed concern about workers salaries and conditions.

Fortress has said it will retain Morrisons’ current management team and execute its existing strategy, keeping its head office in northern England, and not selling stores.

“Should these discussions lead to any transaction, Apollo would be fully supportive of Fortress’s stated intentions regarding Morrisons,” Apollo said in a statement.

Shareholders will have until the end of August to consider the Fortress offer. Britian’s JO Hambro Capital is the company’s biggest shareholder.

Walmart is the current owner of Asda, Britain’s third biggest supermarket chain. BlackRock is the largest shareholder in Tesco, the third-largest retailer in the world. The Vanguard Group is the second largest shareholder followed by Norges Bank Investment Management.

The holding company for Sainsbury’s is dominated by the Qatar Investment Authority, which holds 21.99 percent of the company.

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