The ongoing speculation around the possible sale of Morrisons to a private equity firm has prompted a plea for continued support from the farmers union.
Under current ownership, grocery giant Morrisons prides itself on being “British farming’s single biggest customer”, working directly with over 2,200 livestock farmers and more than 200 growers.
However, since news emerged over the weekend of a failed £5.5bn bid from New York-based private equity firm Clayton Dubilier & Rice (CD&R), speculation has grown about what different direction a potential new owner would take with the grocer.
In response, a spokesman from the National Farmers Union (NFU) called on Morrisons’ management team to continue to support embattled UK farmers under new ownership.
“This is a developing story and we will be keeping a watch over any potential future takeover of Morrisons. We will assess the impact on farmers as details surface. Morrisons is a significant supporter of British farming and we would like to see this continue under any new ownership.”
The news could be the latest blow to the embattled UK farming industry which has so far this year endured struggles with Brexit redtape, fears that the new UK-Australia trade deal could lead to tariff-free meat importations and growing fears about the lack of workers for the coming picking season.
Concerns over private equity takeovers
The comment from the NFU joins a chorus of stakeholders growing increasingly concerned at the prospect of a private equity takeover of not just Morrisons, but of the UK grocery sector more generally.
Yesterday (Monday June 21), shopworkers’ union Usdaw called on the government to draw up a “comprehensive industrial strategy” and provide “more rigorous testing of corporate governance to ensure sustainable ownership” of grocers.
As has been widely reported the cross party members of the Business, Energy and Industrial Strategy Committee are drafting a letter to the Competition and Markets Authority to secure assurances over any potential takeover.
Morrisons is appealing to investors because of its significant assets, owning 85% of the freeholds of its supermarkets, as well as 19 manufacturing sites and abattoirs which help make it the second-largest fresh food manufacturer.
The bid has sparked speculation about a fresh run by private equity firms on UK grocers more generally. UK companies in general have been undervalued in recent years, mostly due to ongoing Brexit uncertainty and the corresponding effect it had on lowering the pound.
Combined with the fact that banks and lenders historically like lending money against supermarkets due to their predictable cash flows, experts believe that the UK grocery market will be increasingly enticing to overseas investors.
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