Morrisons chief to be quizzed over £6.3bn takeover: Business secretary Kwasi Kwarteng seeks meeting with chairman
Morrisons chiefs are set to be quizzed by ministers over a takeover of the supermarket that could net them a £35million payout.
Kwasi Kwarteng, the Business Secretary, is seeking a meeting with the chain’s board about its proposed sale to private equity for £6.3billion.
He is said to want reassurances over jobs, pensions and the company’s UK operations, with Labour also calling for ‘legally binding’ commitments.
Concerns: Kwasi Kwarteng, the Business Secretary, is seeking a meeting with Morrisons’ board about its proposed sale to private equity for £6.3bn
It came as an analysis by the Mail found that top executives at the company including boss Dave Potts stand to make £34.7million from the deal, while non-executives led by chairman Andy Higginson could bag another £750,000.
The board is recommending the bid from a consortium led by private equity firm Fortress, which is offering 254p per share overall.
Rival buyout firms Apollo and Clayton, Dubilier & Rice could swoop with a higher offer. But a backlash is growing, as a top 20 shareholder said the Fortress bid was ‘far too low’.
And retail expert Bill Grimsey branded private equity ‘the ugly face of capitalism’ and said the late former chairman Sir Ken Morrison would be ‘spitting’ with rage.
Kwarteng’s comments will lead to fresh speculation that the Government could intervene or demand binding commitments from a buyer.
He told the Financial Times: ‘Morrisons is a historic brand name and I am very interested in seeing how the situation develops.’
Lord Field of Birkenhead, the ex-chairman of the House of Commons work and pensions committee, called on the Government to intervene on the grounds of ‘food security’.
‘During the pandemic we struggled with imports and this is the only grocer that owns its own farms,’ he said.
Morrisons’ executives stand to make £34.7m from the supermarket’s takeover, while non-executives led by chairman Andy Higginson (pictured) could bag another £750,000
Morrisons, which employs 110,000 staff, is one of Britain’s biggest food producers and claims to be the top customer of the country’s farmers.
But critics have argued that a private equity takeover could see its properties sold for a quick profit, in sale and leaseback deals, while buyout firms are infamous for cutting jobs and retirement benefits.
If the deal goes through, analysts at UBS estimated Morrisons’ debts will double to £6.4billion. To head off concerns, Fortress has promised to keep the grocer based in Bradford, keep a minimum staff wage, maintain relationships with suppliers and avoid ‘material’ property sales.
In a letter to the Government, it said that it was ‘acutely aware of the wider responsibilities that come with ownership of a business with Morrisons’ history, culture and importance to the British public’.
But the commitments have only been made as part of an ‘intention statement’ – so they are not legally binding and can be ditched after just 12 months.
The bid will need 75 per cent approval from shareholders but on Monday top 10 investor Legal & General warned a sale should not happen ‘for the wrong reasons’.
A top 20 shareholder said: ‘It is far too low. Back in 2018, Morrisons shares were actually trading higher than what is being offered at the moment, so this does not look like a knockout price to me. This is a very high-quality business that has been undervalued.’
Grimsey, the former boss of Iceland and Wickes, said: ‘Private equity, particularly in the retail sector, is the ugly face of capitalism.’
Asked what he would say to shareholders who want the stock to rise, he said: ‘I would say they are greedy, and Ken Morrison is fuming in his grave and spitting tacks.’