Experts fear a takeover of Morrisons could see the supermarket giant shift offshore for tax reasons
A takeover of Morrisons could see the supermarket giant shift offshore for tax reasons, experts fear.
The grocer is bracing itself for a fresh offer from US group Clayton, Dubilier & Rice (CD&R) after an initial £5.5billion bid was rejected last week.
But it is feared that a private equity buyout could see Morrisons’ tax base shifted out of the UK.
A bad sign: It is feared that a private equity buyout could see Morrisons’ tax base shifted out of the UK
Asda – one of Britain’s ‘Big Four’ supermarkets alongside Morrisons, Tesco and Sainsbury’s – has already fallen into private equity hands after a £6.8billion takeover by the Issa brothers backed by TDR Capital.
Mohsin and Zuber Issa had arranged for Asda to be legally owned in the offshore tax haven of Jersey.
CD&R has not yet made a formal approach for Morrisons. It has until July 17 to table an official bid or walk away. Although CD&R’s intentions are unclear, under its ownership fellow British retailer B&M was moved offshore.
A Daily Mail investigation found the bosses of the discount chain funnelled millions of pounds through Luxembourg and the Cayman Islands under structures set up by CD&R.
Dame Margaret Hodge, former chairman of the Commons public accounts committee, said: ‘If, as they have done in the past, they create a financial structure in a tax haven for no reason than to avoid tax then they will be betraying the British people by not contributing towards the services we all need.’
B&M is noted to be a private equity success story – as it has since rejoined the stock market and seen growth.
CD&R offered to pay 230p per share for Morrisons, which employs 118,000 staff.
It is one of the most audacious takeovers attempted by a private equity firm during the pandemic – and sparked fears that other household names could be next.
The Morrisons bid has so far been rejected on the grounds that it is too low and ‘significantly undervalued’ it. Former pensions minister Ros Altmann warned that Morrisons’ property assets could be moved offshore.
This could require the company to pay big rents that the private equity owners wouldn’t pay any tax on.
Altmann said: ‘This has happened with care homes – it’s part of the model that private equity terms typically use.’