The battle to buy supermarket Morrisons will go to an auction process, the stock market’s Takeover Panel has confirmed.
Private equity giants Fortress and Clayton, Dubilier & Rice (CD&R) must now submit formal bids with the first round of five starting this Saturday.
A result will be announced by Monday morning, although the process could also be scrapped if either side state they will not increase their current offers.
It brings to an end a takeover saga that has dragged on since CD&R first made an approach for the Bradford-based grocer back in June, leading to speculation the sector was ripe for private equity takeovers.
Following the June bid, rival Softbank-backed Fortress made an offer of £6.3 billion in July.
But shareholders felt this was too low and Fortress, which owns Majestic Wines, returned a month later with an increased offer of £6.7 billion in August, which the board accepted.
Later that month CD&R returned with an increased bid of £7 billion, leading to the board withdrawing their support for the Fortress bid and throwing its weight behind the higher offer.
A vote by shareholders on the CD&R bid, where former Tesco chief executive Sir Terry Leahy is an adviser, is due on October 19.
The Takeover Panel said: “On the basis that neither offeror has declared its offer final, such that either offer may be increased or otherwise revised, a competitive situation continues to exist.”
It said each party will now be subject to an auction where either side may make an increased bid.
If no bids are made, there will be up to three further rounds where either side can make an offer only if the other side made an increased bid in the immediately preceding round.
If no increased bids are received, a final round will run to allow for one last chance at a deal.
Both sides have agreed all bids will be at a fixed cash price and cannot include stakes in other businesses or dividends to shareholders.
If both sides are still bidding by the final round, Fortress must make its bid-per-share with an even number and CD&R with an odd number, to avoid the bids being the same.
The results will be published by Monday morning at the latest.
However, if either side makes a “no increase” statement before the end of the week, the auction will be cancelled.
Both sides have been keen to stress they want to uphold the supermarket’s values and have attempted to ward off suggestions they will start selling off vast swathes of the company’s freeholds.
Supermarkets typically lease properties, whilst Morrisons continues to own around 90% of its estate.
There have also been concerns that any new owner may reduce the supermarket’s tax bill, with off-shore shell companies set up ahead of the takeover.
Morrisons’ pension trustees will have to be consulted, although earlier this month they said an agreement had been reached with (CD&R).