Labour calls for new Morrisons owners to provide assurances following £7bn bid
The Labour Party has called on the new owners of Morrisons to to "protect workers, pension fund holders and local people" following private equity firm Clayton, Dubilier & Rice's (CD&R) successful £7bn bid at an auction earlier today.
CD&R was vying with a consortium led by the Softbank-owned Fortress Investment Group for the Bradford-based supermarket. It was successful in the auction process with a 287 pence a share bid, beating out Fortress, which offered 286 pence.
Seema Malhotra MP, Shadow Minister for Business and Consumers, said “Morrisons is a much loved British firm which has been rooted in communities up and down the country for over 100 years. The new owners must urgently deliver binding assurances for workers, pension fund holders, and local people.
“Government has a responsibility too. It must ensure that the new owners are responsible, long-term investors, seeking to build the business for the future and that decisions taken are also in the public interest.
“We cannot see a repetition of previous cases where business have been loaded with debt and asset-stripped. Morrisons is a great British company which must be safeguarded for the future.”
Both CD&R and Morrisons have yet to comment on the outcome of the auction.
Kevin Hollinrake, the Conservative MP for Thirsk and Malton, has also been seeking written assurances that Morrisons will continue to pay UK corporate taxes if it is bought by a private equity firm.
"I am not against private equity investment but we have to make sure they do not benefit from any in-built tax advantage," he told The Yorkshire Post earlier this week. "We must do more to establish and maintain a fair and level playing field for all businesses that operate in the UK."
However, CD&R has previously assured that Morrisons would remain headquartered and registered in the UK and would continue to pay taxes in the UK should the US-based provated equity firm be successful.
Morrisons' board is expected to recommend shareholders accept the new offer at a shareholder meeting slated for October 19.
Bradford-based Morrisons started out as an egg and butter merchant in 1899. It listed its shares in 1967 and is Britain’s fourth-largest grocer after Tesco, Sainsbury’s and Asda.
The battle for Morrisons, which has been running since May, is the most high-profile of a raft of bids for British companies this year, reflecting private equity’s appetite for cash-generating UK assets.
CD&R’s victory marks a triumphant return to the UK grocery sector for Terry Leahy, the former chief executive of Britain’s biggest supermarket chain Tesco, who is a senior adviser to the firm.
Morrisons is the second UK supermarket chain in a year to be acquired by private equity after a buyout of Leeds-based Asda completed in February.
Sainsbury’s has in recent months been mooted as another possible target for private equity and investment companies.
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