CD&R has made fine-sounding pledges but they don’t stop this being yet another debt-fuelled buyout
The auction for Morrisons wasn’t worth the wait, but the mission to cast Clayton Dubilier & Rice as a kindly, far-sighted owner of the UK’s fourth largest supermarket chain continues at full swing. Andrew Higginson, chairman of Morrisons, did his bit by saying private equity sometimes gets “a bad rap” and generally makes its returns from businesses growing rather than via “financial engineering”.
Top marks for effort, but let’s not pretend that this deal, as it is structured at the outset, is markedly different from most debt-fuelled buyouts. First, the behavioural pledges offered by the buyer – covering sale and leaseback deals, staff pay and treatment of suppliers – don’t deserve the hype they have received. They are vague and only last for 12 months.