WM Morrison Supermarkets : Tender Offer

Wm Morrison Supermarkets Plc announces Tender Offers for its €700,000,000 2.250 per cent. Notes due 2020, £400,000,000 4.625 per cent. Notes due 2023 and £400,000,000 3.500 per cent. Notes due 2026

NOT FOR DISTRIBUTION IN OR INTO OR TO ANY PERSON LOCATED OR RESIDENT IN THE UNITED STATES, ITS TERRITORIES AND POSSESSIONS (INCLUDING PUERTO RICO, THE U.S. VIRGIN ISLANDS, GUAM, AMERICAN SAMOA, WAKE ISLAND AND THE NORTHERN MARIANA ISLANDS), ANY STATE OF THE UNITED STATES OR THE DISTRICT OF COLUMBIA(the United States) OR IN OR INTO ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO RELEASE, PUBLISH OR DISTRIBUTE THIS ANNOUNCEMENT (SEE 'OFFER AND DISTRIBUTION RESTRICTIONS' BELOW).

31 May 2016. Wm Morrison Supermarkets Plc (the Company) announces today separate invitations to holders of its outstanding (a) €700,000,000 2.250 per cent. Notes due 2020 (ISIN: XS0945158821) (the 2020 Notes), (b) £400,000,000 4.625 per cent. Notes due 2023 (ISIN: XS0717069073) (the 2023 Notes) and (c) £400,000,000 3.500 per cent. Notes due 2026 (ISIN: XS0808629389) (the 2026 Notesand, together with the 2020 Notes and the 2023 Notes, the Notesand each a Series) to tender their Notes for purchase by the Company for cash (each such invitation an Offerand, together, the Offers).

Subject as further set out in the Tender Offer Memorandum (as defined below), the Company invites holders to tender Notes for purchase pursuant to the Offers up to an aggregate cash amount of £200,000,000 (or, where applicable, its euro equivalent, in each case excluding all Accrued Interest Payments in respect of such Notes, but including associated Derivative Costs). The Offers are being made on the terms and subject to the conditions contained in the tender offer memorandum dated 31 May 2016 (the Tender Offer Memorandum) prepared by the Company, and are subject to the offer restrictions set out below and as more fully described in the Tender Offer Memorandum.

Copies of the Tender Offer Memorandum are (subject to distribution restrictions) available from the Tender Agent as set out below. Capitalised terms used in this announcement but not defined have the meanings given to them in the Tender Offer Memorandum.

Summary of the Offers

Rationale for the Offers

The Offers are being made in the context of the Company's ongoing focus on debt reduction. The Company intends to use its strong liquidity position to reduce the level of gross debt outstanding and the resulting interest expense.

Details of the Offer in respect of the 2020 Notes

2020 Notes Purchase Price and Accrued Interest

In respect of any 2020 Notes validly tendered and accepted for purchase by the Company pursuant to the relevant Offer, the Company will pay a purchase price for such 2020 Notes (the 2020 Notes Purchase Price) to be determined at or around 1.00 p.m. (London time) (the Pricing Time) on 8 June 2016 (the Pricing Date) in the manner described in the Tender Offer Memorandum by reference to the sum (such sum, the 2020 Notes Purchase Yield) of a purchase spread of 90 bps (the 2020 Notes Purchase Spread) and the 2020 Notes Interpolated Mid-Swap Rate.

The Company will also pay an Accrued Interest Payment in respect of the 2020 Notes accepted for purchase pursuant to the relevant Offer.

2020 Notes Acceptance Amount

The Company currently proposes to accept for purchase pursuant to the relevant Offer an aggregate nominal amount of 2020 Notes (such aggregate nominal amount, the 2020 Notes Acceptance Amount) such that the Sterling Equivalent of the total amount payable by the Company for all the 2020 Notes accepted for purchase pursuant to the relevant Offer (excluding all Accrued Interest Payments in respect of such 2020 Notes, but including associated Derivative Costs) is no greater than £100,000,000 (although the Company reserves the right, in its sole discretion, to allocate a significantly lower or a significantly higher amount for the purchase of 2020 Notes pursuant to the relevant Offer, the final Sterling amount so allocated for the purchase of 2020 Notes pursuant to the relevant Offer being the 2020 Notes Consideration Amount).

Scaling in respect of the 2020 Notes

In respect of the 2020 Notes, if the Company decides to accept any validly tendered 2020 Notes for purchase pursuant to the relevant Offer and the aggregate nominal amount of 2020 Notes validly tendered is greater than the 2020 Notes Acceptance Amount, the Company intends to accept such validly tendered 2020 Notes for purchase on a pro ratabasis such that the aggregate nominal amount of 2020 Notes accepted for purchase pursuant to the relevant Offer is no greater than the 2020 Notes Acceptance Amount, as further set out in the Tender Offer Memorandum.

Details of the Offers in respect of the 2023 Notes and the 2026 Notes

Purchase Prices and Accrued Interest

In respect of any 2023 Notes and 2026 Notes validly tendered and accepted by the Company for purchase pursuant to the relevant Offer(s), the Company will pay a purchase price (each an MDA Purchase Priceand, together with the 2020 Notes Purchase Price, each a Purchase Price) determined at the Pricing Time on the Pricing Date in the manner described in the Tender Offer Memorandum by reference to:

(a) in respect of the 2023 Notes, the sum of the 2023 Notes Purchase Spread and the 2023 Notes Benchmark Security Rate; and

(b) in respect of the 2026 Notes, the sum of the 2026 Notes Purchase Spread and the 2026 Notes Benchmark Security Rate.

The 2023 Notes Purchase Spread and the 2026 Notes Purchase Spread will each bedetermined pursuant to a modified Dutch auction procedure, as further described in the Tender Offer Memorandum (the Modified Dutch Auction Procedure).

The Company will also pay an Accrued Interest Payment in respect of any 2023 Notes and/or 2026 Notes accepted for purchase pursuant to the relevant Offer(s).

Purchase Spreads - Modified Dutch Auction Procedure

Under the Modified Dutch Auction Procedure, the Company will determine, in its sole discretion, (A) the aggregate nominal amounts of (i) the 2023 Notes (if any) (such amount being the 2023 Notes Acceptance Amount) and (ii) the 2026 Notes (if any) (such amount being the 2026 Notes Acceptance Amount) it will accept for purchase pursuant to the relevant Offer(s) and (B) in respect of each such Series, a single purchase spread (expressed as a percentage) that it will use in the calculation of the MDA Purchase Price for such Series, in each case taking into account the aggregate nominal amount of the 2023 Notes and 2026 Notes so tendered and the purchase spreads specified (or deemed to be specified, as set out below) by tendering Noteholders.

The 2023 Notes Purchase Spread will not be more than 250 bps (the 2023 Notes Maximum Purchase Spread) and will in any case be the highest spread (producing the lowest price for such Notes) that will enable the Company to accept for purchase the 2023 Notes Acceptance Amount.

The 2026 Notes Purchase Spread will not be more than 260 bps (the 2026 Notes Maximum Purchase Spread) and will in any case be the highest spread (producing the lowest price for such Notes) that will enable the Company to accept for purchase the 2026 Notes Acceptance Amount.

The Company will not accept for purchase any 2023 Notes or 2026 Notes tendered at purchase spreads less than the relevant Purchase Spread.

Aggregate Consideration Amount

The Company currently proposes to accept for purchase pursuant to the Offers in respect of the 2023 Notes and the 2026 Notes an aggregate nominal amount of such Notes such that the aggregate of (a) the total amount payable by the Company for all such Notes accepted for purchase pursuant to the relevant Offers (excluding all Accrued Interest Payments in respect of such Notes, but including associated Derivative Costs), and (b) the 2020 Notes Consideration Amount is no greater than £200,000,000 (although the Company reserves the right, in its sole discretion, to allocate a significantly lower or a significantly higher amount for the purchase of Notes pursuant to the Offers, the final amount so allocated for the purchase of Notes pursuant to the Offers being the Aggregate Consideration Amount). The Company will determine the allocation of the Aggregate Consideration Amount between each Series in its sole discretion, and reserves the right to accept significantly more or significantly less (or none) of any Series as compared to the other Series.

Scaling in respect of the 2023 Notes and the 2026 Notes

In respect of each of the 2023 Notes and the 2026 Notes, if the Company decides to accept any Notes of the relevant Series for purchase pursuant to the relevant Offer and the aggregate nominal amount of the relevant Series validly tendered pursuant is greater than the 2023 Notes Acceptance Amount or the 2026 Notes Acceptance Amount, as applicable, the Company intends to accept certain 2023 Notes or 2026 Notes, as applicable, for purchase on a pro ratabasis as further described in the Tender Offer Memorandum. 2023 Notes or 2026 Notes validly tendered pursuant to Non-Competitive Tender Instructions may be subject to pro ratascaling, but will be given priority in acceptance over 2023 Notes or 2026 Notes, as applicable, validly tendered pursuant to Competitive Tender Instructions, as further described in the Tender Offer Memorandum.

Tender Instructions

In order to participate in, and be eligible to receive the relevant Purchase Price pursuant to the relevant Offer, Noteholders must validly tender their Notes by delivering, or arranging to have delivered on their behalf, a valid Tender Instruction that is received by the Tender Agent by 4.00 p.m. (London time) on 7 June 2016 (the Expiration Deadline).

Tender Instructions will be irrevocableexcept in the limited circumstances described in the Tender Offer Memorandum.

Tender Instructions relating to 2023 Notes or 2026 Notes may be submitted on a 'non-competitive' or a 'competitive' basis as more fully described in the Tender Offer Memorandum.

Tender Instructions must be submitted in respect of a minimum nominal amount of Notes of the relevant Series of no less than the minimum denomination for such Series, being €100,000 in respect of the 2020 Notes or £100,000 in respect of the 2023 Notes or the 2026 Notes, and may thereafter be submitted in integral multiples of €1,000 or £1,000, as applicable. A separate Tender Instruction must be completed on behalf of each beneficial owner and in respect of each Series.

Indicative Timetable for the Offers

The Company may, in its sole discretion, extend, re-open, amend, waive any condition of or terminate any Offer at any time (subject to applicable law and as provided in the Tender Offer Memorandum) and the above times and dates are subject to the right of the Company to so extend, re-open, amend and/or terminate such Offer.

The above times and dates are subject to the right of the Company to extend, re-open, amend, and/or terminate any Offer (subject to applicable law and as provided in the Tender Offer Memorandum). Noteholders are advised to check with any bank, securities broker or other intermediary through which they hold Notes when such intermediary would need to receive instructions from a Noteholder in order for that Noteholder to be able to participate in, or (in the limited circumstances in which revocation is permitted) revoke their instruction to participate in, an Offer before the deadlines set out above. The deadlines set by any such intermediary and each Clearing System for the submission and withdrawal of Tender Instructions will be earlier than the relevant deadlines set out above and in the Tender Offer Memorandum.

Unless stated otherwise, announcements in connection with the Offers will be made (i) by publication through RNS and (ii) by the delivery of notices to the Clearing Systems for communication to Direct Participants. Such announcements may also be found on the relevant Reuters Insider Screen and be made by the issue of a press release to a Notifying News Service. Copies of all such announcements, press releases and notices can also be obtained upon request from the Tender Agent, the contact details for which are below. Significant delays may be experienced where notices are delivered to the Clearing Systems and Noteholders are urged to contact the Tender Agent for the relevant announcements during the course of the Offers. In addition, Noteholders may contact the Dealer Managers for information using the contact details below.

Noteholders are advised to read carefully the Tender Offer Memorandum for full details of, and information on the procedures for, participating in the Offers.

Questions and requests for assistance in connection with (i) the Offers may be directed to the Dealer Managers, and (ii) the delivery of Tender Instructions may be directed to the Tender Agent, the contact details for each of which are set out below.

BNP Paribas (Telephone: +44 20 7595 8668; Attention: Liability Management Group; Email:liability.management@bnpparibas.com) and HSBC Bank plc (Telephone: +44 20 7992 6237; Attention: Liability Management Group; Email:liability.management@hsbcib.com) are acting as Dealer Managers and Lucid Issuer Services Limited (Telephone: + 44 20 7704 0880; Fax: +44 20 3004 1590, Attention: Victor Parzyjagla; Email: morrisons@lucid-is.com) is acting as Tender Agent.

DISCLAIMER This announcement must be read in conjunction with the Tender Offer Memorandum. This announcement and the Tender Offer Memorandum contain important information which should be read carefully before any decision is made with respect to the Offers. If any Noteholder is in any doubt as to the contents of the Tender Offer Memorandum or the action it should take, it is recommended to seek its own financial advice, including in respect of any tax consequences, from its broker, bank manager, solicitor, accountant or other independent financial, tax or legal adviser. Any individual or company whose Notes are held on its behalf by a broker, dealer, bank, custodian, trust company or other nominee must contact such entity if it wishes to tender such Notes pursuant to the Offers. None of the Company, the Guarantor, the Dealer Managers or the Tender Agent or any of their respective directors, employees or affiliates makes any recommendation whether Noteholders should tender Notes pursuant to an Offer or participate in an Offer.

Offer and Distribution Restrictions

The distribution of this announcement and/or the Tender Offer Memorandum in certain jurisdictions may be restricted by law. Persons into whose possession this announcement and/or the Tender Offer Memorandum comes are required by each of the Company, the Guarantor, the Dealer Managers and the Tender Agent to inform themselves about, and to observe, any such restrictions. Nothing in this announcement nor the Tender Offer Memorandum constitutes an offer to buy or a solicitation of an offer to sell the Notes (and tenders of Notes in an Offer will not be accepted from any Noteholder) in any circumstances in which such offer or solicitation is unlawful. In those jurisdictions where the securities, blue sky or other laws require an Offer to be made by a licensed broker or dealer and either Dealer Manager or any of the Dealer Managers' respective affiliates is such a licensed broker or dealer in any such jurisdiction, such Offer shall be deemed to be made by such Dealer Manager or such affiliate, as the case may be, on behalf of the Company in such jurisdiction.

United States

The Offers are not being made, and will not be made, directly or indirectly, in or into, or by use of the mails of, or by any means or instrumentality of interstate or foreign commerce of, or of any facilities of a national securities exchange of, the United States. This includes, but is not limited to, facsimile transmission, electronic mail, telex, telephone, the internetand other forms of electronic communication. The Notes may not be tendered in the Offers by any such use, means, instrumentality or facility from or within the United States or by persons located or resident in the United States. Accordingly, copies of this announcement, the Tender Offer Memorandum and any other documents or materials relating to the Offers are not being, and must not be, directly or indirectly mailed or otherwise transmitted, distributed or forwarded (including, without limitation, by custodians, nominees or trustees) in or into the United Statesor to any persons located or resident in the United States. Any purported tender of Notes in the Offers resulting directly or indirectly from a violation of these restrictions will be invalid and any purported tender of Notes made by a person located in the United States or any agent, fiduciary or other intermediary acting on a non-discretionary basis for a principal giving instructions from within the United States will be invalid and will not be accepted.

Each Noteholder participating in an Offer will represent that it is not located in the United States and is not participating in such Offer from the United States, or it is acting on a non-discretionary basis for a principal located outside the United States that is not giving an order to participate in such Offer from the United States. For the purposes of this and the above paragraph, United Statesmeans the United States of America, its territories and possessions(including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands), any state of the United States of America and the District of Columbia.

Italy

None of the Offers, this announcement, the Tender Offer Memorandum or any other document or materials relating to the Offers have been or will be submitted to the clearance procedures of the Commissione Nazionale per le Società e la Borsa(CONSOB) pursuant to Italian laws and regulations. Each Offer is being carried out in Italy as an exempted offer pursuant to article 101-bis, paragraph 3-bis of the Legislative Decree No. 58 of 24 February 1998, as amended (the Financial Services Act) and article 35-bis, paragraph 4 of CONSOB Regulation No. 11971 of 14 May 1999, as amended. Noteholders or beneficial owners of the Notes that are located in Italy can tender Notes for purchase in the Offers through authorised persons (such as investment firms, banks or financial intermediaries permitted to conduct such activities in the Republic of Italy in accordance with the Financial Services Act, CONSOB Regulation No. 16190 of 29 October 2007, as amended from time to time, and Legislative Decree No. 385 of 1 September 1993, as amended) and in compliance with applicable laws and regulations or with requirements imposed by CONSOB or any other Italian authority.

United Kingdom

The communication of this announcement, the Tender Offer Memorandum and any other documents or materials relating to the Offers is not being made and such documents and/or materials have not been approved by an authorised person for the purposes of section 21 of the Financial Services and Markets Act 2000. Accordingly, such documents and/or materials are not being distributed to, and must not be passed on to, the general public in the United Kingdom. The communication of such documents and/or materials as a financial promotion is only being made to those persons in the United Kingdom falling within the definition of investment professionals (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Financial PromotionOrder)) or persons who are within Article 43 of the Financial Promotion Order, or any other persons to whom it may otherwise lawfully be made under the Financial Promotion Order.

France

The Offers are not being made, directly or indirectly, to the public in the Republic of France (France). Neither this announcement, the Tender Offer Memorandum nor any other document or material relating to the Offers has been or shall be distributed to the public in France and only (i) providers of investment services relating to portfolio management for the account of third parties (personnes fournissant le service d'investissement de gestion de portefeuille pour compte de tiers) and/or (ii) qualified investors (investisseurs qualifiés), other than individuals, acting for their own account, all as defined in, and in accordance with, Articles L.411-1, L.411-2 and D.411-1 of the French Code monétaire et financier, are eligible to participate in the Offers. Neither this announcement nor the Tender Offer Memorandum have been or will be submitted for clearance to or approved by the Autorité des Marchés Financiers.