Morrisons chief: New US owners won’t sell assets | Morrisons

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Morrisons’ chairman said he expects the US private equity firm to buy the supermarket chain for £7.1bn to make good on its promise and hold the retailer’s assets rather than sell them.

Andrew Higginson also played down concerns about the UK’s supply chain crisis, caused by the national shortage of heavy truck drivers across Britain. The supply crunch was well publicized but “a bit exaggerated,” he said, adding that he did not expect an interruption to Christmas deliveries.

“[Christmas] It tends to come every year, and everyone seems to be kind of ready for that,” Higginson said. “So, no, I think it’s going to be Merry Christmas for people, I think people will want to treat themselves as they normally do. There are logistical issues at the moment and I think these are well publicized and a bit exaggerated, but you know UK supply chains are incredibly efficient and I’m sure we’ll be able to deliver a great Christmas to customers as we go by. “

The supermarket chief — who will step down if shareholders accept the offer from Clayton, Dubilier & Rice (CD&R) (CD&R) later this month — said he trusts the new private equity owners to stick to their commitments not to sell Morrisons store property in order to raise cash.

They have made a list of pledges which I believe, under current legislation, are as good as we can get. “They are very strong commitments: to keep the business as is, to keep the head office in Bradford,” Higginson said.

CD&R narrowly outperformed Softbank-owned Fortress Investment Group by bidding 287p to 286p on Saturday. Shares in British supermarkets rose in early trading on data that indicated that Fortress is still interested in buying the British retailer.

Joshua Buck, a Fortress financier, reiterated the expressions of interest the company showed over the weekend. “The UK remains a very attractive investment environment from many perspectives and we will continue to explore opportunities to help strong management teams grow their business and create long-term value,” he said.

Sainsbury’s stock, seen as the main target for a private equity takeover, rose as much as 5% sometime on Monday morning, making it the biggest rise on the FTSE 100, while shares in Tesco and Ocado also rose more than 1%. .

CD&R is trying to address concerns raised by politicians and unions, who fear a wave of private equity takeovers could lead to British companies being divested, putting them on debt and lowering labor standards.

“I think private equity is getting a bit of a bad reputation,” Higginson told BBC Radio 4’s Today programme.

“Obviously there is good and evil [private equity firms], as in any society. But in general, private equity is focused on growing and trying to grow the business, and that’s how it makes its returns: by improving the business and flipping it over, you know, after a few years.”

He pointed to CD&R’s ownership of B&M, which he said demonstrated that the private equity owner was interested in “business growth and value creation” rather than trying to extract wealth through “some kind of financial engineering.”

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CD&R made an estimated profit of around £1 billion after selling its remaining stake in the discount retailer in 2018, which was chaired by CD&R consultant and former Tesco chairman Sir Terry Leahy for five years after the acquisition in 2012.

Leahy is expected to be named president of Morrisons if shareholders approve the CD&R deal in a vote on October 19.

“I imagine having him on their list would be a very reasonable move,” Higginson said. “I mean, obviously, I know Terry very well by working with him for a number of years, and he’d be a very good head of business.”

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