Morrisons customers could lose out as board backs investor takeover
Shoppers ‘could pay the price’: Morrisons customers and suppliers could lose out after board backs fresh takeover bid from US investors
Morrisons customers, staff and suppliers could lose out after the supermarket’s board backed a fresh takeover bid from a group of controversial investors, critics fear.
The chain revealed at the weekend that it had received a second takeover bid, worth £6.3billion, from a consortium led by US private equity firm Fortress – and would recommend the offer to its shareholders.
The bidders have promised to be ‘good stewards’ of the popular British grocery business, vowing to keep the headquarters in Bradford and not to make any ‘material’ sales of its property.
The chain revealed at the weekend that it had received a second takeover bid, worth £6.3billion, from a consortium led by US private equity firm Fortress – and would recommend the offer to its shareholders. A Morrisons store is seen above
But critics have questioned their intentions. Lord Sikka, a Labour peer and professor at Essex Business School, said: ‘My concern is whether this is a good deal for consumers, employees and businesses in the supply chain. Private equity has a habit of only paying minimum wage and not offering any security to the supply chain.
‘Various firms have made promises in the past to protect British jobs, but we need practical steps. And for that, you need to involve employees in the sale process.’
Morrisons bosses are set for bumper pay-outs under the Fortress offer. Chief executive David Potts would earn £19million for the 3million shares he owns outright and 4.6million that he could receive under various company reward schemes.
Operating chief Trevor Strain could make £11million and finance boss Michael Gleeson more than £3million.
The new Fortress-led offer will also include Canadian pensions giant CPPIB and KREI, a division of Koch Industries, owned by billionaire Donald Trump ally Charles Koch. Fortress was founded in 1998 by partners including Wesley Edens, a majority shareholder in Aston Villa football club.
The fears for Morrisons come amid a wave of takeover attempts for British businesses by private equity firms
Morrisons’ shareholders will now vote on the deal. It must be passed by more than 50 per cent of those who vote and together they must hold 75 per cent of the company.
But top-ten shareholder, fund manager JO Hambro, said last week that bidders should be offering 270p per share for Morrisons – well above Fortress’s bid of 254p.
Private equity firms buy companies and look to sell them on around five years later for a profit. But they are often criticised for their brutal tactics and short-term outlook.
Critics drew attention to the track record of Morrisons’ new bidders. Charles Koch and his late brother David sparked anger in 2010 after pumping more than £700,000 into a campaign to repeal California’s climate change laws. The family’s foundation, which invests in property, has also funded pushes to evict tenants from their homes during the pandemic.
Meanwhile, CPPIB refused to back an agreement between shopping centre business Intu and its lenders to give it breathing room on its debt last year.
The fears for Morrisons come amid a wave of takeover attempts for British businesses by private equity firms.
Buyout companies unveiled 365 offers for companies between January and June – the most since records began in 1984 – leading to accusations of ‘pandemic plundering’ as they rush to snap up businesses on the cheap.
Last month, Morrisons rejected US giant Clayton Dubilier and Rice’s £5.5billion bid.
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