Morrisons’s private equity owners begin carving up the business

Morrisons’ private equity owners will carve up the business and sell £500million worth of manufacturing and distribution sites.

Clayton, Dubilier & Rice is appointing advisers to oversee the disposal of the plants in a process set to begin ‘imminently’, according to Sky News. When CD&R bought the supermarket group in October for £7billion, the New York-based buyout house pledged not to engage in major sales and leasebacks of stores.

The pledges apply for a year, but do not cover manufacturing and distribution facilities. The £500million property sale will be one of the biggest shake-ups at the supermarket since CD&R took over. The deal was orchestrated by former Tesco boss Terry Leahy, who now works for the private equity group.

It comes after Morrisons yesterday warned Russia’s invasion of Ukraine will hit sales and profits this year. The grocer said the war is adding to inflation and denting consumer confidence and spending, which will hurt the sector.

It said sales and profits have been lower since the start of February and is ‘unable to predict’ how long the disruption will last.

Morrisons, the UK’s fourth biggest supermarket behind Asda, Sainsbury’s and Tesco, has been consistently losing share since falling into private equity hands in October. 

It has seen sales fall faster than rivals since the takeover and has drawn criticism for putting up prices ahead of others.

Asda, which was taken over in 2020 for £6.8billion by private equity house TDR Capital and the Issa brothers, has also been criticised over price hikes.

Morrisons also revealed yesterday it took a £44million hit because of supply chain disruption in the 13 weeks to January 30. 

It booked sales for the period of £4.6billion, up from £4.5billion a year earlier. Profit fell over the same period from £350million to £316million.