Labour calls on government to intervene in possible Morrisons takeover

Labour has called on the government to intervene in any private equity takeover of Morrisons after the supermarket group was approached by a US buyout firm with a £5.5bn offer.

Morrisons spurned the move by Clayton, Dubilier & Rice, which under UK takeover rules has until 17 July to announce a firm offer or walk away.

But the approach, which was at a big premium to the supermarket’s previous share price, prompted shares in the group to surge by 30% on Monday.

The government has powers to intervene in takeovers on grounds including competition, media plurality, national security and pandemic response – though Labour wants this to be widened to include industrial strategy.

Seema Malhotra, the party’s business spokesperson, said: “There are really worrying examples of companies including private equity firms loading businesses with debt, stripping them for parts and leaving with the rewards.

“The government cannot just stand by and let that happen to Britain’s supermarkets, which are at the heart of our communities and provide an essential national service as we have seen during the pandemic.”

Details of the offer for Morrisons, first revealed by Sky News, were confirmed over the weekend.

On Monday, a Downing Street spokesperson declined to comment on it.

The prospect of Britain’s fourth biggest supermarket group being taken over by a US private equity firm has prompted concern and scepticism in some quarters.

Morrisons employs 118,000 people, making it one of the country’s biggest private sector employers.

It is unique among Britain’s supermarket groups in making more than half of the fresh food it sells.

Morrisons also owns 85% of its 497 stores, raising concerns that a new owner could sell the property and lease it back in order to raise cash to repay debts incurred during the takeover, or mortgage it.

Source: Read Full Article