Home Private Equity Morrisons’ US private equity owner facing backlash over sell-off plan

Morrisons’ US private equity owner facing backlash over sell-off plan

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In house: Last year Morrisons bought Falfish, a family-owned seafood firm in Cornwall

Morrisons’ US private equity owner facing backlash over plan to sell off fisheries, warehouses and food manufacturing plants

  • Clayton Dubilier & Rice sounding out buyers for £600m of  grocer’s assets 
  • It would draw up agreements for Morrisons to lease them back from new owners
  • Such ‘sale and leaseback’ deals – used by private equity – can be controversial

Morrisons’ US private equity owner is facing a backlash over a plan to sell off fisheries, warehouses and food manufacturing plants. 

Clayton Dubilier & Rice, which snapped up Morrisons in a £7billion deal last year, is sounding out buyers for around £600m of the supermarket’s assets, The Sunday Times reported. 

If it sold the units, it would draw up agreements for Morrisons to lease the fisheries, warehouses and other plants back from their new owners. 

In house: Last year Morrisons bought Falfish, a family-owned seafood firm in Cornwall

In house: Last year Morrisons bought Falfish, a family-owned seafood firm in Cornwall

But such ‘sale and leaseback’ deals – used by private equity firms to boost their returns from buyouts – can be controversial. 

While leases may be affordable at first, they can climb, putting a strain on a business. 

Debenhams agreed a £495m sale-and-leaseback while under private equity ownership in 2005 – a move that contributed to its demise in 2020. 

Selling Morrisons’ food production operations may be unpopular with customers who like the fact that it sources and processes much of its own food. For example, last year it bought Falfish, a family-owned seafood firm in Cornwall. 

Labour MP Darren Jones, who chairs the Commons business committee, said: ‘This is a classic private equity tactic. Even where there is evidence of the harm it can cause, there is little we can do until ministers intervene.’

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