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UK Secretary Calls for Guarantee for Morrisons Acquisition

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Ministers have called for a meeting with executives at British supermarket chain Wm Morrison, where a private equity group will take over £9.5 billion to seek peace of mind for jobs and investments.

On Saturday morning, Morrisons recommended a bid led by Fortress, which owns SoftBank, which offered 252p of shares and 2p of special dividends, along with a long list to protect the company’s employees, suppliers and pension holders.

The deal has garnered political attention since earlier this year as part of a wave of private equity takeovers by British companies.

Business secretary Kwasi Kwarteng is expected to request a meeting with Morrisons chairman Andrew Higginson in the coming weeks, according to people familiar with the situation for seeking jobs, pensions and reassurance about the chain’s UK operations.

In an interview with the Financial Times on Tuesday, Kurteng declined to comment on the meeting’s request, but added that “the situation is being monitored.”

“Morrisons is a historic brand name,” he said. [I am] I’m very interested in seeing how things play out. Before making any hasty judgments, you need to evaluate what is going on. You need to look at behavior, details and performance to make sure certain safeguards are being maintained. ”

Kwarteng added that private equity buying UK companies was “not a bad thing in and of itself” and that the “global UK” will thrive with foreign investment.

Shadow Business Minister Seema Malhotra has urged the government to scrutinize the deal and make commitments from buyers to protect its workforce, pension schemes and supply chains.

Fortress wrote a letter to the government to reassure them of their intentions against Morrisons. © Anthony Devlin/Bloomberg

“The government’s indifferent approach to acquisitions means that UK businesses buy too often with short-term goals and not keeping the interests of the UK economy, businesses, workers and customers in mind,” she said.

Morrisons accepted a Fortress-led offer last month after Clayton, Dubilier & Rice’s 230p shares declined a bid. After losing a bid last year with Asda, another UK supermarket chain, Apollo said Monday it was “in the preliminary stages of evaluating possible offers”.

Fortress wrote a letter to the government giving them reassurance about their intentions for the company. The letter, seen by the FT, states that Fortress is “aware of the broader responsibilities of ownership of a business that has Morrison’s history, culture and significance to the British public”.

This letter was signed by Joshua Pack, Co-Chief Investment Officer of Fortress’s Credit Fund on behalf of the company. “I want to be completely confident in my commitment to becoming a supportive and responsible owner of Morrisons upon successful completion of the transaction,” Pack said.

Rooted in the market stalls the group opened in 1899, Morrisons’ future promises include maintaining the company’s headquarters in West Yorkshire, protecting pensions and maintaining a minimum wage contract of £10 an hour for its employees. . .

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“We are committed to being great stewards of the Morrisons through the next stage of evolution.”

“The only risk worth any level of discussion is the extent of the UK Secretary of State’s involvement in business, energy and industrial strategy,” Mark Kelly, managing director of investment bank Cowen, said in a memo on Monday.

However, he added that Fortress did a lot of work to solve this problem. “In fact, the risk of intervention by the UK government is very low.”

The UK’s largest asset manager, Legal & General Investment Management, warned on Monday that private equity funds should not take over Morrison “for the wrong reason”, including profiting from the supermarket chain’s asset portfolio or “pushing the company into debt.” .

Union Usdaw also expressed concerns about the deal and said it was seeking “urgent” meetings with management and potential new owners “to protect the long-term future of the business in this process.”

Morrisons declined to comment.

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