CD&R has offered £5.5 billion (about $7.7 billion) for Morrisons, but the chain spurned the proposal as undervaluing the company. CD&R, which has until July 17 to revise its offer, hasn’t walked away yet. Fearing that more potential bidders are poised to swoop in on Morrisons, Britain’s opposition Labour Party is calling on the government to intervene—even before a deal is on the table.
Seema Malhotra, a Labour member of Parliament, says PE ownership poses a threat to supermarkets, citing worries about loading businesses with debt, stripping them of their assets, and leaving employers and taxpayers to pick up the tab. That’s a crude generalization, but Malhotra isn’t alone. A surge in PE acquisitions of UK companies since the start of the year has invited increasing scrutiny and criticism of the asset class from politicians and the media alike.
It also doesn’t help that only last December, the UK also saw the collapse of Debenhams, an iconic department store that was once controlled by CVC Capital Partners, TPG and Merrill Lynch Global Private Equity. Critics say Debenhams never recovered from the debt it incurred under PE ownership.