RUTH SUNDERLAND: Morrisons should go it alone

US buyout firm Clayton, Dubilier & Rice has, as anticipated, upped the ante in the bid battle for Morrisons by lodging an improved offer late last night.

CD&R has been keen to establish its credentials as a responsible owner in its battle to win control of the supermarket group from under the nose of rival bidder Fortress.

Indeed, it has some claim to being the responsible face of private equity. In our campaign against undesirable private equity practices, we have pointed to its backing of discount retailer B&M as the exception to the asset-stripping, cost-cutting rule.

US buyout firm Clayton, Dubilier & Rice has been keen to establish its credentials as a responsible owner in its battle to win control of the supermarket group Morrisons 

B&M has so far been a stonking success, with strong growth in store numbers, revenue and jobs. Its shares have almost doubled in the past five years and it has stormed into the FTSE 100 – going against the tendency for private equity floats to bomb out.

Fronting the CD&R bid is Sir Terry Leahy, one of this country’s legendary retailers who has worked with the Morrisons’ top team. 

Other senior figures include Vindi Banga, who is a senior independent director at GSK and a former board member at M&S, as well as having occupied senior roles at Unilever.

By contrast, the man leading the bid by Fortress, Texan Joshua A Pack, is an unknown quantity on the British retail scene. 

And whilst CD&R, which has a reputation for making operational improvements, has been in this country for 20 years, the Fortress consortium looks opportunistic.

But this debate should not be framed as if a takeover is inevitable and the only issue is to pick between of the two bidders. 

This isn’t a case of the lesser of two evils. Morrisons does not have to sell. It could have a fantastic future as a listed UK company. 

The board should take a leaf out of the book of Astrazeneca, which rejected a bid from Pfizer in 2014 and has gone on to great things.

Dirty money

The IMF’s move to block support to Afghanistan is clearly the right one: member countries cannot tolerate their money being channelled to the Taliban.

Unfortunately, this action and the freezing of assets overseas will not be enough to choke off the cash the militant group needs for its barbarous activities.

Firm information on Taliban funding is, for obvious reasons, hard to pin down.

It has not emulated Isis, which used to issue information in a format similar to a corporate annual report.

But according to a UN Security Council report last month, the Taliban has an annual income of between $300million-$1.6billion. Sources of revenue include ‘charitable foundations’, wealthy individual sympathisers, extortion, ransoms and illicit mining.

Afghanistan’s enormous lithium reserves could potentially be a source of much larger future income for whoever is in power.

One of the biggest revenue streams is the heroin trade, which is thought to have brought in around $464million last year for the Taliban. 

Stopping this drugs money sluicing through the system requires concerted action, including by UK banks, some of which have a record of poor money laundering controls.

And the proceeds of the frauds and scams that have taken off in the pandemic end up funding all manner of evil, from human trafficking to terrorism. All the more reason to clamp down.

Just in case

The intricacies of supply chain management is not normally a subject to set the pulses racing.

But a combination of the pandemic and Brexit has made it an issue that is starting to hit home: as we report today, businesses are reporting difficulties with products from cleaning fluids to Sauvignon Blanc.

Devotees of peri-peri chicken will have been alarmed that some branches of Nando’s had to shut temporarily because of a shortage of fowl. 

A consequence of the pandemic and Brexit is that businesses have been forced into a wholesale re-think of their supply chains.

The received supply chain wisdom until recently was ‘just-in-time’, where stock was kept to a minimum.

This is a strategy that can increase efficiency and boost working capital, but there is not much margin for error. Firms now are learning the virtues of ‘just in case’.

These problems and the related issue of staff shortages could hold back recovery and are likely to push up wages and prices.

The Bank of England, believes inflationary pressures to be a short term glitch, a view which was vindicated by the latest figures this week.

Nonetheless, it will be watching closely.

This post first appeared on Dailymail.co.uk