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.
, 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.”
Ends
Notes to editors:
- The Government has powers under the Enterprise Act 2002 to
intervene in mergers and acquisitions where these raise issues of
national security, the stability of the UK financial system,
media plurality, or maintaining in the UK the capability to
combat and to mitigate the effects of public health emergencies.
- Labour has called for the Enterprise Act to be expanded to
include a public interest test where an acquisition may have
long-term implications for the UK’s industrial strategy.
