Morrisons has rebuffed a shock takeover bid from a US buyout firm advised by former Tesco boss Sir Terry Leahy, a move that could spark approaches from rival bidders.

Morrisons has been approached with a takeover proposal from New York-based private equity from Clayton Dubilier & Rice (CD&R).

However, Morrisons has said the “highly conditional non-binding” 230p per share proposal “significantly undervalued” the company, and has rejected the offer as a result.

CD&R, whose approach was first reported by Sky News, now has until July 17 to make a firm offer for Morrisons.

The private equity firm, which is working with Goldman Sachs and has been advised by former Tesco boss Sir Terry Leahy, has confirmed it is “considering a possible cash offer” for the UK’s fourth largest grocer, but has said there is “no certainty” a formal bid will be made.

It is understood that CD&R’s initial offer and Morrisons’ rejection of it could spark interest from other prospective private equity firms or Amazon, which has an online partnership with the grocer. 

It is understood that Morrisons’ board is looking for a more attractive price point alongside commitments on jobs and assets from a prospective bidder.

The supermarket chain owns the freehold on 85% of its supermarkets, warehouses and manufacturing sites, which could make it an attractive asset for sale-and-leaseback deals.

But Morrisons considers its property to be an important part of its business, both for the British farming industry and the resilience of its supply chain, and would seek assurances from a prospective buyer over their future, as well as commitments over prospects for its 118,000 employees, their pensions and head office location.