Battle for Morrisons culminates in $10b auction

An auction to decide who wins a $10 billion, six-month battle for British supermarket chain Morrisons begins , with the result expected to be announced later.

The one-day auction pits US private equity group Clayton, Dubilier and Rice (CD&R) against a consortium led by Softbank owned Fortress Investment Group.

CD&R, whose 285 pence a share bid was recommended by Morrisons' board in August, is advised by Terry Leahy, a former CEO of Britain's biggest supermarket chain Tesco.

Morrisons, based in Bradford, northern England, began as an egg and butter merchant in 1899. It listed its shares in 1967 and is Britain's fourth-largest grocer after market leader Tesco, Sainsbury's and Asda.

The battle for Morrisons is the most high-profile among a spate of bids for British companies this year, reflecting private equity's appetite for cash-generating assets.

The Takeover Panel, which governs the process for M&A deals in Britain, moved to an auction because neither bidder has declared their offers final.

The contest will consist of a maximum of five rounds.

In the first, either bidder may increase their offer. If neither does, CD&R's existing agreed offer wins.

In the event of a higher bid in round one, the other bidder can raise their own offer in three subsequent rounds.

If there is still no winner, both offerors may make an increased bid in a fifth and final round.

To prevent a draw any fifth round offer by Fortress must be at an "even" number of pence, while CD&R must bid an "odd" number of pence.