MPs reacted angrily yesterday after the frontrunner to buy Morrisons admitted it will use a shell company in the Cayman Islands to run the supermarket.
Clayton, Dubilier and Rice (CD&R) said it will use an entity called Market21 GP Holdings in the Caribbean as it released full details of its plans for the Bradford-based grocer to investors.
The firm is currently leading with a £7billion bid as it heads into a timed auction against rival private equity firm Fortress next month, ending a four-month battle.
Front-runner: Clayton, Dubilier and Rice is currently leading with a £7billion bid for supermarket Morrisons
But parliamentarians said it ‘beggars belief’ that another major supermarket could be managed through a tax haven, and called on the Government to tighten rules on foreign takeovers. Last year the ownership of Asda was transferred to the tax haven of Jersey after it was bought by the Issa brothers and TDR Capital.
Conservative MP Kevin Hollinrake said he will write to former Tesco boss Sir Terry Leahy, who is heading up CD&R’s bid, for assurances the firm will pay UK taxes.
Margaret Hodge, a Labour MP and campaigner against tax avoidance, said: ‘It beggars belief that one of our biggest supermarkets could soon be bought by a private equity firm using tax havens.’
Darren Jones, chairman of the MPs’ business committee, added: ‘The idea that private equity can just sweep in, buy up British businesses and move them offshore to reduce the amount of tax they pay, without any rules or regulatory interventions, is just madness and an insult to British taxpayers.’
CD&R said the entity that will own Morrisons, Market Bidco, will be registered and incorporated in the UK, adding: ‘Morrisons will remain registered in the UK, headquartered in Bradford and continue to pay taxes in the UK.’
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