// Morrisons CEO David Potts writes to 3000 farmers to assure them that firm Fortress would be a “suitable and responsible owner”
// Unlike other supermarkets, Morrisons deals directly with farmers to stock shelves.
// A £6.5bn takeover bid from Fortress had raised fears among Morrisons’ thousands of suppliers
Morrisons has reportedly written to farmers to reassure them that a takeover bid from a private equity firm will protect its agreements and relationships with suppliers.
According to the Guardian and The Sunday Telegraph, Morrisons chief executive David Potts wrote to around 3000 farmers who supply the grocer, in which he assured them that US-based private equity firm Fortress would be a “suitable and responsible owner”.
Potts also said that Fortress’ pledges about the future of Morrisons “carry genuine weight”, and that it would protect the character of the business and its relationship with its suppliers.
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“Throughout our discussions with Fortress, we considered very carefully whether Fortress would be a suitable and appropriate owner of Morrisons and whether their plans for the business would protect and develop the fundamental character of Morrisons for the benefit of all stakeholders,” Potts wrote.
“And that of course includes the farmers we work with and British agriculture more widely.”
Unlike other supermarkets, Morrisons deals directly with the farmers who stock its shelves, rather than wholesalers. As a result, the National Farmers’ Union (NFU) calls Morrisons “British farming’s biggest direct customer”.
Speculation has been rife that farmers were concerned about their relationship with Morrisons after Fortress struck a deal to acquire the Big 4 grocer earlier this month.
The takeover deal values Morrisons at £6.3 billion, but after the inclusion of £3.2 billion of net debt, the total value grows to £9.5 billion.
Unlike other supermarkets, Morrisons deals directly with its farmers to stock their shelves.
Farmers had questioned whether the deal would affect Morrisons’ relationships with food producers and its payment practices, as well as its commitment help them improve sustainability practices.
National Farmers’ Union president Minette Batters said last week that it would still be “keeping a close watch over any potential takeover of Morrisons” but welcomed news that Fortress “has recognised the significant role Morrisons plays as British farming’s biggest direct customer” and also “committed to continue with Morrisons’ strategic intentions to support British farmers and work with them to deliver on the business’s environmental commitments”.
Morrison’s board accepted Fortress’ takeover earlier this month, having rejected an earlier proposal from US private equity firm Clayton, Dubilier & Rice (CD&R).
It is not yet clear if the bidding process is complete, with speculation that CD&R could return with another bid, or a fresh bid could arise from another private equity firm.