Supermarket chain Morrisons has cut almost 5,000 jobs in the 12 months to October last year, as it continues to struggle under a debt pile of more than £7.5billion built up since private equity firm Clayton, Dubilier & Rice (CD&R) took it over in 2021.
The figures, highlighted by Daily Mail columnist Ruth Sunderland, come as Morrisons reported losses of £629million in its most recent results.
Sunderland said she had warned five years ago, in the summer of 2021, that a CD&R takeover of Morrisons would put jobs at risk. "So it has proved," she wrote, adding that the debt pile makes it difficult for the grocery chain to invest in keeping prices low at a time when customers are caught in a cost-of-living crisis.
Asda also struggling
Rival supermarket Asda, owned by the Issa brothers and private equity firm TDR Capital, is also deep in debt and underperforming, according to Sunderland.
A string of private equity deals around the time of the pandemic prompted the Daily Mail to run a campaign to curb predatory private equity ownership. Sunderland acknowledged that not all private equity ownership is destructive and that there are some genuine success stories, but said much of it "was questionable to say the least", pointing to takeovers of strategically important defence companies including Cobham and Ultra Electronics.
She said private equity firms now own dental and vets' surgeries, nurseries, elderly care facilities, firms that carry out eye operations for the NHS, and children's homes, areas where she said most people instinctively feel the industry's profit-driven approach has no place. She noted that wider public attention only turned to the issue when FIFA president Gianni Infantino proposed selling a stake in the World Cup to private equity.
Wave of deals this summer
Sunderland said private equity has had another busy summer of dealmaking. US group Apollo is taking over budget airline EasyJet in a £5.7billion deal, while testing group Intertek is being sold to Swedish buyout group EQT for £9.4billion.
KKR is buying energy distribution company DCC for £5.8billion, and a company owned by CD&R is buying outsourcing group Mitie for £3.1billion.
Defence firms targeted
Aerospace company Gooch & Housego has agreed a £400million deal with a US private equity house, while fellow defence supplier Senior is selling itself to two private equity buyers for £1.28billion.
Sunderland said both deals are subject to the National Security and Investment Act, adding that the desirability of Britain having its own independent defence companies ought to be obvious given US President Donald Trump's attitude towards his European NATO allies.
Wider concerns for the industry
Sunderland said London's capital markets are being depleted because companies are undervalued, giving private equity firms the chance to buy them cheaply. She also pointed to concerns over the health of the private equity industry itself, including the use of "continuation funds", which she described as a dumping ground for businesses that firms cannot sell to an outside buyer, along with worries about the closely linked private credit market.
Sunderland called on Andy Burnham, the Mayor of Greater Manchester, to recognise the risks of the country being stripped of its business assets by private equity if he wants growth in every postcode. "I don't want to be writing 'I told you so' again in another five years," she wrote.
