Morrisons takeover: unions call for job security in supermarkets | City & Business | Finance
US private equity giant Clayton Dubilier & Rice narrowly beat rival Fortress in the Morrisons auction yesterday, ending four months of buyout speculation. The winning CDR bid was worth just over £ 7bn or 287p per share, just a dime more than the losing Fortress bid. The Usdaw Store Workers Union has said it wants urgent talks with Morrisons management and the CDR because it wants to ensure job and company protection. Morrisons employs approximately 110,000 people across the country in its stores, supply chain, farms and transportation network.
A spokesperson said: “We will be attending meetings with the new owners and Morrisons as we want job insurance and continue our relationship with the company.”
Unions and retail experts fear jobs will be lost and parts of the Morrisons company mortgaged, sold, or both. Indeed, CDR is set to dramatically increase Morrisons’ debt burden as it engages in a fierce price battle with rivals Tesco, Asda, Sainsbury’s and German discounters Aldi and Lidl.
Although it invests £ 3.4 billion of its own money to finance the Morrisons acquisition, CDR will borrow the remainder from four investment banks.
Once shareholders approve the Morrisons sale in a vote on October 19, CDR will refinance its £ 3.6bn bank debt by selling IOUs or junk bonds at interest high to city investors. He will then transfer responsibility for those unwanted bonds to Morrisons, which will more than double his net debt to £ 6.6bn.
Experts add that one of Morrisons’ main draws to CDR is that it owns 87% of the freehold ownership of its properties. Selling these properties and then re-letting them could be used to fund a huge salary for the CDR, they say.
The CDR offering was led by former Tesco chief executive Sir Terry Leahy, and he pledged to invest in Morrisons. A spokesperson said he was happy to have won the auction and looked forward to working with the Morrisons management team.
Under the leadership of Managing Director Dave Potts, Morrisons has weathered years of declining sales, profits and market share. It is the fourth largest supermarket in the UK and holds 9.8% of the market.
Joshua Pack, Managing Partner of Fortress, said, “Morrisons is an exceptional company and we wish the company and everyone involved in it the best for the future.