Treasury to investigate private equity takeovers

Treasury officials are examining the impact of private equity deals around the country, amid concerns at the pace of takeovers of British companies.

Buyouts, many of them in the grocery sector, have reached their highest level since 2007.

Morrisons’ board recently accepted an offer from private equity firm Fortress, overtaking an earlier bid from rivals Clayton, Dubilier and Rice.

Apollo, which has assets of $72 billion, may also gatecrash the deal.

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Tate & Lyle is to be broken up after selling a controlling stake in its sweeteners arm to KPS, a New York buyout firm.

Some fear the onslaught of deals will harm job security, the economy and national infrastructure.

Critics often point to Debenhams, which struggled after falling into private equity hands in the early 2000s and collapsed last year.

Yesterday, Labour demanded that the government bring in a public interest test for takeovers.

“Other nations do not allow their critical, strategic businesses to be exposed without a proper analysis of the impact on their long-term industrial base,” shadow business secretary Ed Miliband said.

When a takeover affects national security, public health, media plurality or the stability of the financial system, ministers can intervene under the Enterprise Act 2002.

“Private equity takeovers are often leveraged with large amounts of debt, which can end up being owned by the acquired company and can play a significant role in subsequent business insolvencies,” a Labour spokeswoman told The Times.

Business secretary Kwasi Kwarteng is consulting on plans to class large private companies as “public interest entities”, meaning more disclosures and directors’ liabilities.

He will meet with Morrisons chief executive David Potts on Friday, who is expected to explain his support for the Fortress deal.

FinanceSupermarkets

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