ALEX BRUMMER: Morrisons set for a return to the High Street with private equity-backed rescue of McColl’s
Employees of failing corner shop group McColl’s have good reason to be thankful to private equity.
For the moment, all 1,160 stores have been rescued by Clayton, Dubilier & Rice-controlled Morrisons and 16,000 jobs saved.
As critically, the pension fund is being taken on, which is a welcome break from what happened in recent retail takeovers.
Rebranding: All 1,160 McColl’s stores have been rescued by Clayton, Dubilier & Rice-controlled Morrisons and 16,000 jobs saved
It is fascinating that deep pockets and access to finance meant that the owners of Morrisons and Asda were the only trade buyers in the frame.
Asda sought to escape the pension fund and other liabilities, whereas Morrisons recognised an obligation to keeping McColl’s trading.
It could be argued that Morrisons had no other choice if it wanted to protect its previous supply and fascia partnership with McColl’s.
It has already transformed 270 stores into the new format and plans are in-hand to go up to 470. Conversions are speeding along at four a week.
Now there is a much bigger opportunity to provide consumers with access to the Morrisons partly home-grown supply chain.
The Ukraine conflict has underlined the importance of UK food security, which was among the issues that surfaced during the £7billion buyout battle for Morrisons.
For chief executive David Potts it is a case of full circle. Among his first actions when taking over from predecessor Dalton Phillips in 2015 was to close down a chain of convenience stores largely consisting of former Blockbuster outlets.
Now Morrisons is back in the game and able to compete with Tesco, Sainsbury’s and M&S. All have discovered how metropolitan Britain has fallen out of love with superstores.
Some of the smaller, less alluring McColl’s cheap booze, confectionery and fag stores are unlikely to make the final cut.
Supermarkets do not generally do home deliveries of newspapers, which could make McColl’s less convenient for many customers. That would be a pity.
Keeping the City safe for consumers is a core function for government.
We should all, therefore, be concerned about the industrial action being orchestrated by Unite union members against the Financial Conduct Authority (FCA).
It is more than just a curiosity in current economic circumstances. In a period of resurgent inflation tensions, employees can be expected to be more active in pursuing pay demands.
Unite is showing signs of rippling muscles on behalf of its members. It has launched industrial action on the heavily used C2C line, which connects London to Southend, in a dispute centred on a low pay offer of 2.5 per cent for maintenance workers.
The GMB is mobilising Cadent gas workers and the RMT for a summer of discontent on the railways.
The imbroglio at the FCA, which has seen pickets outside its Stratford HQ in east London, is largely about change at the regulator.
Chief executive Nikhil Rathi is seeking to shake-up the culture in an institution where regulatory failure has become legion.
He wants a more flexible structure for the 4,000 staff which offers ‘competitive pay and strong rewards for consistent performance’.
Given the free market environment in which the FCA operates, and past bureaucratic snarl-ups, this does not seem unreasonable.
Unite, which represents 600 of the FCA’s workforce, rejects Rathi’s reforms. It argues that the imposition of changes to pay, terms and conditions at the FCA has left thousands of staff ‘worse off’. It rejects ‘management’s ludicrous claims that the changes will boost worker productivity’.
The FCA claims that just 50 per cent – 294 colleagues – voted for the strike action.
It also believes there is union overreach in that Unite is seeking mandatory recognition for whole workforce.
It fears it is using the dispute to speed up a process of statutory recognition.
Rathi could do without this distraction as the FCA wrestles with the fallout from crypto scams and speeds up work on its investigation of the Woodford scandal.
VW chief executive Herbert Diess might have been advised not to have called for a ‘negotiated’ end to Russia’s war on Ukraine.
He fears a prolonged conflict might put back its plans to overtake Tesla in the race to be the world’s leading electric car producer. That is hardly cognitive of Ukraine’s fight for its freedom and independence.
Diess’s lack of sensitivity might evoke memories of the company’s origins. In 1937 Hitler founded VW and asked Ferdinand Porsche to design the new car.
Whatever happened to ‘never forget’.