The battle for British food: Morrisons must be saved from the private equity sharks, says ALEX BRUMMER
What a happy hunting ground Britain has become for the private equity sharks.
Rather than engage in the indignity and expense of a bidding war for Morrisons, tainted Apollo has laid down its weapons and is ready to form a common front with Softbank-backed predator Fortress, which has already rolled its tanks over the supermarket chain’s board.
The collusion of Fortress and Apollo in trying to take one of Britain’s Big Four supermarkets off the public markets makes the £6.3billion bid (worth £9.3billion if debt is included) even more unpalatable.
Teaming up: US private equity firm Apollo said it is ready to join Softbank-backed predator Fortress, in its bid for Morrisons
The easiest line of attack against the marauders is to criticise their reputations. Apollo is the creature of Leon Black, who stepped down from the fund he founded after disclosures of his close financial relationship with the late Jeffrey Epstein.
Among the Fortress investors are the Koch Brothers, known in the US for their insidious support of ultra-conservative causes.
Big battalion UK investors, currently living under the environmental, social and governance mantra (ESG), cannot embrace such buyers.
Nor can they put any faith in pledges to look after Morrisons in a way which would have satisfied the firm’s modern creator the late Ken Morrison.
A close friend – with generations invested in the Leeds-Bradford commercial world – reliably informs me that Ken Morrison would have been horrified by this spectacle, and fought hammer and tongs to make sure the name over the door was not besmirched and a Yorkshire business debased.
If the non-executives, headed by Rooney Anand, had an understanding of the public interest, they would have stopped chairman Andy Higginson and chief executive David Potts rushing headlong into a deal.
Morrison, after all, is not just a successful food retailer. It has entered into shrewd supply-and-delivery partnerships with Amazon Fresh and Ocado.
And in a nation which venerates its farming and food production standards above all others, Morrisons is an exemplar. It delivers fresh produce from farm and fishing boat to stores directly and through its own production plants.
It is hard to believe that private equity marauders, with a goal of reducing a debt mountain as quickly as possible and raising margins, would have a commitment to an ethical food chain.
The board has raised the white flag so it is now up to shareholders to back Legal & General in its fiercely expressed opposition. It is possible for determined investors to overturn wrong-minded boards.
Having defended Unilever against Kraft Heinz, UK long shareholders threw down the gauntlet and fought back against the firm’s desire to hide itself out of plain sight in Rotterdam.
Saving Morrisons is not just a matter for the money people. It is of profound political and consumer interest.
Commons select committees looking at business and agriculture have heavy lifting to do. We know how effective public hearings can be, as we saw recently with Greensill.
Leaving a proper examination of the Morrisons bids until after the summer recess should not be an option.
That would play straight into the hands of smart financiers skilled at speeding deals up through court-sanctioned schemes of arrangement.
The brakes must be engaged.
Crypto wars
The clampdown on crypto assets cannot be great for fintech pioneer Revolut, valued at £24billion at a recent fundraising.
In the last financial year, trading crypto was Revolut’s fastest-growing category.
Rules proposed by the European Union require those dealing in crypto to collect detail of senders and recipients so that they can be better tracked for money-laundering and tax purposes.
Providing anonymous crypto-assets or wallets would be banned in line with regulations governing bank accounts.
The Lithuanian banking authority, which provides the licence that is Revolut’s gateway to the EU, may need to get its skates on.
Ice fog
Unilever finds itself sinking into a sand dune in the Middle East.
A decision by the socially conscious independent Ben & Jerry’s board to stop supplies of cookie dough ice cream to West Bank settlements has put Unilever chief executive Alan Jope in a difficult position.
He plans to keep selling the upmarket ice cream in the rest of Israel, even though the B&J’s independent board has adopted the extreme position of wanting a full boycott. Who said running a business with a purpose was going to be easy?