We can’t let Britain’s supermarkets be scrapped for parts – Labour
Labour has called for the Government to stand up for British businesses by securing legal assurances about jobs, pensions, and companies’ futures when takeovers are attempted.
This week it was announced that Morrisons had rejected an initial takeover bid from the US private equity firm Clayton, Dubilier & Rice. The firm has until 17 July to return with another offer. Labour has called for the Government to confirm it will intervene in any takeover of Morrisons to secure binding commitments about the buyer’s business plan, the job security of employees, and the protection of pensions.
Morrisons’ assets are hugely important to British farmers and food supply chains, as demonstrated during the Covid-19 crisis. But private equity ownership models are often based around ‘sale and leaseback’ tactics, paying off debt by selling off the company’s assets, like property.
The Government has powers to intervene in takeovers of companies on a number of grounds including competition, media plurality, national security and pandemic response. For years the Government has refused to do more to protect UK companies, but Labour is clear that developing a robust takeover regime is essential if we want firms to succeed and provide good jobs here in the UK.
Labour has called for Government to have powers to intervene where an acquisition may have long-term implications for the UK’s industrial strategy.
Seema Malhotra MP, Labour’s Shadow Minister for Business and Consumers, said:
“Responsible business owners invest in their companies for the long-term, because they know it is the best way to create wealth, support jobs and achieve long-term success and profitability.
“But there are really worrying examples of companies including private equity firms loading businesses with debt, stripping them for parts and leaving with the rewards. It is far too often the employees, pensioners and the taxpayer who are left to pick up the pieces and pay.
“The Government cannot just stand by and let that happen to Britain’s supermarkets, which are at the heart of our communities and provide an essential national service as we have seen during the pandemic. Ministers must stand up for the hundreds of thousands of workers, loyal customers, our farmers and the wider food retail sector who would be affected by a takeover – and secure the legal commitments we need.”