Labour and Lib Dems urge Morrisons owners to protect workers

Politicians say they will ensure the chain is not heaped with debt and stripped of assets after £7.1bn takeover

Opposition parties have urged Morrisons’ incoming private equity owners to protect workers and ensure that the supermarket is not heaped with debt and stripped of assets as a result of the company’s pending takeover.

Politicians from Labour and the Liberal Democrats have signalled that they will be keeping an eye on US private equity firm Clayton, Dubilier & Rice (CD&R), which over the weekend won a tense auction with a rival suitor to take control of the supermarket chain for £7.1bn.

“Morrisons is a much-loved British firm which has been rooted in communities up and down the country for over 100 years,” Seema Malhotra, Labour MP and shadow minister for business and consumers, said. “The new owners must urgently deliver binding assurances for workers, pension fund holders and local people.”

“We cannot see a repetition of previous cases where businesses have been loaded with debt and asset-stripped. Morrisons is a great British company, which must be safeguarded for the future,” Maholtra added.

Unions and politicians have raised concerns over the wave of private equity takeovers aimed at UK firms, warning companies could be stripped of their property holdings and burdened with borrowed funds to pay off private equity backers, and that working conditions would deteriorate without binding guarantees.

Sarah Olney, Lib Dem MP and the party’s spokesperson for business, said: “It would be a great shame to see local teams lose their stake in the future direction of the business. With uncertain economic times ahead, the new owners must pass the key tests of not loading the business with debt, not cutting jobs, and critically, protecting existing working conditions.”

Labour has already warned it would crack down on the private equity industry if it gains power, saying it would close a loophole on carried interest, which lets private equity executives pay a lower rate of tax on their bonuses, resulting in larger payouts. Shadow chancellor Rachel Reeves said on Twitter that it would “reduce some of the tax incentives leading to asset-stripping.”

Morrisons is a loved British business.

The Conservatives must protect it, and the new owners must urgently assure workers.

Labour will close the private equity carried interest loophole, to reduce some of the tax incentives leading to asset stripping.

— Rachel Reeves (@RachelReevesMP) October 2, 2021

CD&R has tried to ease politicians’ fears by confirming that there were no plans to sell off Morrisons’ attractive store estate to raise cash, and promising that the company’s head office would remain in Bradford. Morrisons – which employs about 120,000 staff in the UK – owns the freehold for 85% of its 497 stores, which has been tipped as an attractive asset for any buyer. It also prides itself on its 19 manufacturing sites including bakeries, abattoirs, fishing fleets and egg farms.

But CD&R has also reached a deal with pension trustees to provide additional security and support for the scheme in a move that helped the private equity firm clinch backing from the Morrisons board even before the takeover went to auction.

The private equity firm, which narrowly beat the 286p offer by a consortium led by Softbank-owned Fortress Investment Group with a 287p bid on Saturday, has also expressed support for Morrisons’ recent pay award of at least £10 an hour for all workers in stores and manufacturing sites.

A CD&R spokesperson said: CD&R values Morrisons’ distinctive business model and is committed to supporting it, including the successful ESG [environmental, social, and governance] and broader stakeholder engagement strategies of the company that are essential to its continued success.”

But Maholtra said the UK government had a responsibility to hold CD&R to its promises. “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.”

CD&R’s offer, which has been backed by the Morrisons board, will go to a shareholder vote on 19 October.


Kalyeena Makortoff

The GuardianTramp

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