Labor urges government to protect Morrisons in possible private capital takeover

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Labor has urged the government to step in to ensure that a possible private fund takeover of Morrisons supermarket chain does not affect Britain’s food security, damage agriculture or does not lead to job losses.

The country’s fourth-largest grocer, which employs 110,000 people, said on Saturday it had rejected an unsolicited £ 5.5 billion offer from US buyout group Clayton, Dubilier and Rice (CD&R).

But Morrisons’ share price has risen from 178p to 238p since the market opened on Monday, indicating investors expect CD&R – or a rival – to come back with a higher bid than its original 230p offer. per share.

Opposition MPs said ministers must be prepared to prevent the Bradford-based company from falling victim to the type of asset dismemberment often associated with private equity buyers, who typically seek to make their targets more effective , before selling at a profit.

They expressed concerns about the effect a deal would have on jobs, as well as the future of its nationwide network of meat, poultry and fruit and vegetable facilities, which play a role. important in the food supply of British tables.

Morrisons’ food processing operations include a fish supplier in the Camborne constituency and Redruth of George Eustice, who is responsible for food safety as Secretary of State in the Department of Environment, Food and of Rural Affairs.

Luke Pollard, shadow minister of Defra, said: “Morrisons is not only a large supermarket, it is also a major food producer.

“The government must ensure in the event of a takeover that jobs are protected, that the business is not broken and that our country’s food security is protected. “

Morrisons owns 17 food processing plants, the majority in Conservative ridings, employing more than 8,000 people between them.

They include more than 140 people who work at Falfish, a Cornish company Morrisons bought earlier this year, becoming the first supermarket to own its own fishing boat.

The company operates in Falmouth and Redruth, which fall under the constituency of Eustice.

Morrisons’ food production operations also include Farmers Boy, which manufactures bacon, ground meat and sausages, cold cuts, fruit and savory pies, quiches and cheese from sites in Bradford, Winsford in Cheshire and Deeside in North Wales.

Labor MP Mark Tami, whose Alyn and Deeside constituency in Wales includes the Deeside factory where Morrisons employs 1,110 people, said a private buyout would be bad for jobs and British agriculture.

“This is not to be confused with anything other than an attempt to strip a good business for short-term profit,” he said. “Morrisons has a strong pension fund, high store ownership rates and, most importantly in my area, their own production which in turn supports British agriculture.

“At a time when Britain needs investment and jobs more than ever, this deal only seems to offer a bleak future for a good company.

“If shareholders vote for the quick cash option, I think regulators and the government need to take a very close look at whether this deal would jeopardize UK jobs, including at Farmers Boy in Deeside. “

The government can intervene in takeovers for reasons of competition, national security, economic stability, plurality of media and capacity to respond to pandemics. Labor has called on the government to give itself the power to intervene where deals could affect long-term industrial strategy.

After CD&R confirmed that it made an unsolicited offer for Morrisons over the weekend, the supermarket chain said its board of directors “unanimously concluded that the conditional proposal significantly undervalues ​​Morrisons and its prospects. ‘to come up “.

CD&R has until July 17, 5:00 p.m. to make a firm offer at a higher price, or to announce that it does not intend to pursue its interest.

US private equity buyers have targeted the UK in recent months, scenting for bargains after the pandemic pushed asset prices down.

Analysts said the approach would likely be the first of several openings, a sentiment supported by the stock market, where Morrisons shares closed at 237.8p on Tuesday, above the initial offer of 230p per share.

Morrisons has long made its UK supply chain a leading selling point, highlighting its deals with 2,700 UK farmers, who deliver livestock and produce directly to its 17 food processing facilities, which supply 493 stores .

The company claims to be the UK agricultural industry’s biggest customer.

The National Farmers Union said, “This is a developing story and we will be monitoring any potential future takeovers of Morrisons. We will assess the impact on farmers as the details emerge. Morrisons is a strong supporter of British agriculture and we would like this to continue under any new ownership. “

A government spokesperson said: « We are committed to ensuring the UK remains open for business, while protecting the livelihoods of UK workers and UK investment.

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“The government recognizes that foreign investors play a major and positive role in stimulating economic growth in all parts of the UK. In most cases, it is fair that mergers are treated as a business matter for the parties involved.

Part two of a review of Britain’s food strategy, led by Leon fast food chain co-founder Henry Dimbleby, is due out later this year, with a government white paper on food set to follow in six. month.

The first part of the review said the Covid-19 pandemic had exposed weaknesses in the UK’s food supply chain during times of crisis.

The Guardian has contacted CD&R for comment.


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