Morrisons reassures farmers over private equity sale

Morrisons has claimed its private equity bidder would be a “responsible owner” amid fears that a takeover would undermine the supermarket’s relationship with farmers.

In a letter to 3000 farmers, chief executive David Potts claimed that the investment consortium, led by buyout firm Fortress, had made “genuine” commitments.

“We considered very carefully whether Fortress would be a suitable and appropriate owner of Morrisons,” he wrote.

“That of course includes the farmers we work with and British agriculture more widely.”

READ MOREMorrisons buyer seeks to win over sceptics

The US private equity firm has tried to soothe fears after the £6.3 billion deal was struck earlier this month, pledging to pay staff £10 an hour and safeguard pensions.

It also claimed it will maintain the Big 4 grocer’s headquarters in Bradford.

However, farmers believe that Morrisons – which claims to be “British farming’s single biggest customer” – might backtrack on supply and environmental commitments under new owners.

In his letter, Potts claimed that Fortress “does not anticipate any material changes to existing payment practices” with farmers.

He added that it “fully supports” Morrisons’ social and environmental promises.

Scepticism remains after US food giant Kraft broke its vow to keep open a Bristol site when it took over Cadbury in 2010.

Conservative MP Kevin Hollinrake, whose North Yorkshire constituency is home to a number of farmers, argued that Fortress’ commitments should be legally binding.

“It’s always worrying when a private equity company has no connection with what was until recently a family owned-business,” he told The Sunday Telegraph.

“With the Kraft-Cadbury issue we have been let down before, so I think it’s reasonable to ask for something more than assurances.”

“This is a developing situation and we will be keeping a close watch over any potential takeover of Morrisons,” National Farmers’ Union Minette Batters said.

“It is encouraging that the potential buyer has […] committed to continue with Morrisons’ strategic intentions to support British farmers and work with them to deliver on the business’s environmental commitments.”

Morrisons shares leapt to 268p when markets opened this morning.

FinanceSupermarkets

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