Asset Strippers Are Preparing to Feast on Britain’s Covid-Ravaged Economy

Lambert here: You say “asset strippers” like that’s a bad thing.

By Laurie Macfarlane, an economics editor at openDemocracy, and a research associate at the UCL Institute for Innovation and Public Purpose. He is the co-author of the critically acclaimed book ‘Rethinking the Economics of Land and Housing.’ Originally posted at Open Democracy.

For much of the past half-century, Morrisons supermarket has been hailed as a bastion of responsible British capitalism. Under the leadership of the late Ken Morrison, the company prided itself on its conservative business model, characterised by low levels of debt and good relations with workers and suppliers. But in recent weeks Britain’s fourth-largest supermarket chain has been the subject of a bidding war between investors that have a rather different business ethos.

In June, private equity firm Clayton, Dubilier & Rice offered to buy Morrisons for £8.7bn, in a move that would take the company off the London Stock Exchange and into private hands. The bid was ultimately rejected, but on 3 July a £9.5bn offer from another private equity firm, Fortress Group, was accepted. The deal, which is still subject to shareholder approval, will result in an estimated £19.6m payoff for the company’s chief executive, David Potts. Another private equity giant, Apollo Global Management, has said it is considering lining up a rival counteroffer.

The scramble to purchase a UK supermarket chain in the middle of a global pandemic raises an obvious question: why are profit-hungry private equity funds so keen to sink their fangs into a sector that is notorious for its cut-throat competition and low profit margins?

The answer provides a glimpse into a dramatic transformation of the UK’s corporate landscape that is underway, which has the potential to fundamentally reshape British capitalism.

A Veil of Secrecy

Although Morrisons has long been run as a profitable business, its financial performance has been far from spectacular. This year the company expects to make about £342m in net profit – half what it made a decade ago and significantly less than its arch-rival Tesco. What the company does have, however, is assets, and lots of them.

The company reportedly owns 85% of its retail stores, more than any other supermarket. With a book value of £5.8bn, Morrisons real estate portfolio is worth nearly as much as the market value of the entire company, based on its current share price. Unlike other supermarkets, Morrisons also owns significant parts of its supply chain. The company deals directly with the 2,700 British farmers rather than wholesalers, who deliver livestock and fresh produce directly to its 17 processing facilities. As a result, the National Farmers’ Union calls Morrisons “British farming’s biggest direct customer”. The company, which employs about 121,000 people, also has a healthy surplus in its defined benefit pension schemes.

To most people, these characteristics mean that Morrisons is a prudently run business that strives to treat its suppliers and workers well. But to profit-hungry private equity firms, it means the company is a prime target for the kind of smash-and-grab asset stripping that the sector has become notorious for.

The typical model is as follows: a private equity firm buys a company by borrowing significant sums of money, typically only putting a small amount of its own funds at risk. Once acquired, these debts are loaded on to the company and a process of cost-cutting begins – old management is replaced, workers are laid off, and pay and conditions are attacked. Assets such as land and buildings are sold, often to an entity registered in an offshore tax haven. The company then rents the buildings back on long-term leases, and pays a management fee to its new private equity owners. The extensive use of leverage not only multiplies returns on investment, interest paid on debts can also be deducted from tax liabilities.

This process of asset sales, corporate restructuring and financial engineering delivers spectacular short-term returns for the new owners. Uniquely, these returns, which are referred to as ‘carried interest’, are taxed as capital gains rather than income. This means that private equity executives often pay lower tax rates on their multi-million-pound bonuses than many salaried workers.

But this short-term profiteering often comes at a price of undermining the long-term viability of the company, which is left paying interest on the debt taken out to purchase it; rent on the properties it previously owned; and management fees to its new owners. This, combined with aggressive cost cutting, often undermines quality and standards, leading to eventual decline and – in some cases – bankruptcy.

Unlike publicly listed companies, private equity owned firms do not need to publish regular accounts. Without a plurality of shareholders to hold the company to account they face far lower levels of scrutiny, and often make extensive use of secretive offshore tax havens. As a result they operate largely behind closed doors.

Morrisons isn’t the first UK supermarket to be targeted by private equity. Last month the Competition and Markets Authority cleared a £6.8bn debt-fuelled acquisition of Asda by the billionaire Issa brothers and private equity firm TDR Capital. The latter is renowned for using complex financial engineering to deliver spectacular returns. In 2013 the firm bought the gym chain David Lloyd using £190m of its own money and £529m in debt. Since then, TDR has extracted more than £550m in dividends and other repayments – almost three times its initial investment. That has been achieved in part by loading new debts onto the company, which now owes more than £1bn.

With Asda already in the hands of private equity, many fear that a takeover of Morrisons would not only pose a risk to the company’s staff and suppliers – it could also trigger further buyouts in the sector, leaving a vital part of the economy operating largely behind a veil of secrecy.

As one retail analyst recently told The Guardian: “The whole industry is now in play. It’s not unrealistic to say that there could not be a single quoted British supermarket left in the foreseeable future.”

A Trail of Destruction

Private equity buyouts are not new; since first emerging in the 1980s they have become an increasingly important part of the corporate landscape. The supermarket industry is just the latest in a long line of sectors to be targeted.

Among the hardest hit has been Britain’s care home sector. Lured by the prospect of steady income streams and large property portfolios, over time private equity firms have become a major player in the UK’s care system. But in recent years their impact has been widely criticised. Since 2011, two private equity-owned care home chains, Southern Cross and Four Seasons, have entered into administration. Cash extraction, unsustainable debt and rent obligations and a complex corporate structure have been blamed for the collapse of the chains, who between them provided care for 45,000 residents. In the case of Four Seasons, the company’s sprawling structure consisted of 200 companies arranged in 12 layers in at least five jurisdictions, including several offshore territories. A 2019 report by the Centre for Health and Public Interest, an independent think tank, concluded that the financial crisis in the care sector is in part due to significant levels of “leakage” – excessive spending on rent, dividends, interest payments and management fees rather than care provision.

Britain’s high streets have also fallen victim to private equity. The collapse of high profile retailers such as Debenhams, Cath Kidston, Toys ‘R’ Us, Poundworld and Maplin has been linked to their periods of private equity ownership, when the owners sold and leased back properties, saddled the companies with debt and extracted large dividends. A recent investigation by Channel 4 found that almost 29,000 jobs were lost when these companies entered administration or liquidation, after their private equity owners had extracted billions in dividends.

Since the 2008 financial crisis, the low interest rate environment has triggered a renewed wave of debt-fueled private equity takeovers in sectors as diverse as North Sea oil and gas and veterinary practices to foster care firms and restaurants chains. This surge has led to a dramatic transformation in Britain’s corporate landscape. According to a recent review commissioned by the UK government, the number of listed public companies in the UK has fallen by about 40% compared with 2008, with a growing portion of the economy shifting into private and often unaccountable ownership structures.

Now the economic fallout of the COVID-19 pandemic means that this is likely to accelerate even further.

Pandemic Profits

For the private equity industry, the COVID-19 pandemic represents a potential gold mine. Fund managers are reportedly sitting on a record $1.7trn of so-called ‘dry powder’ – money that has been raised but not yet spent – and are scouring the globe for vulnerable targets to prey on.

The UK, with its relaxed approach to corporate takeovers, is providing a lucrative hunting ground. Elsewhere in Europe, tighter scrutiny of foreign takeovers and stricter labour laws makes the private equity model less practical. Moreover, the UK’s departure from the European Union has created favourable conditions to pick up a bargain. Investors have pulled more than £29bn from UK equity income funds since the Brexit vote in 2016, which many believe has left the UK stock market undervalued compared to its US and European equivalents – and British companies looking like “easy prey”.

Many British firms have struggled throughout the pandemic, and have been forced to take on significant amounts of debt to survive. High street firms have been hit by the rise of online retail and home working, while city-centre commercial property values have plummeted – creating opportunities to pick up real estate on the cheap.

“Basically any predominantly British-listed company, with one or two exceptions . . . is vulnerable to a takeover offer in a way that doesn’t apply elsewhere in the world.” Lord Paul Myners, the former City minister, recently told the Financial Times.

So far in 2021, private equity firms have announced 124 deals for UK companies with a combined value of £41.5bn – the highest on record. Compared with the same period in 2019, the number of UK buyouts is up almost 60%. Leading private equity firms such as KKR, Blackstone and Carylse are reportedly beefing up their UK operations to capitalise on the lucrative opportunities.

On current trends, it is likely that many more British companies will soon be hoovered up by cash-rich private equity firms. What can policymakers do to prevent this?

At a national level, competition authorities can take a more robust stance against takeovers that aren’t in the national interest, as already happens elsewhere. Sectors that provide quasi-public services, such as care homes, can be brought into public ownership to protect them from falling into the hands of predatory capital. Private equity owned companies should also be required to publish more information about their finances and corporate structures.

Tax reform can also help: removing the tax deductibility of interest payments and taxing ‘carried interest’ as income rather than a capital gain would significantly undermine the viability of the private equity model.

At a local level, policymakers can take proactive steps to transform local economies for the post-pandemic age, rather than let asset strippers reshape towns and cities in their own image. For example: local authorities could capitalise on falling commercial property prices to acquire assets for the public good, transforming empty shops and offices into shared co-working spaces and new local amenities.

The COVID-19 pandemic marks a crucial turning point for the UK economy. The question we must ask is: whose interest should the COVID-19 recovery serve? The answer can either be the general public, or it can be predatory capital. But one thing is clear: it can’t be both.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. nvl

    This happened to Fairway, a local market in New York City, which was forced to declare
    bankruptcy. Don’t know where all this stands, nor the details.

    The internal mismanagement was comic and pathetic, and that I learned of eavesdropping on Fairway workers, while sitting at the back of a bus.

    Decades ago, when only the store on the Upper West Side existed, we learned about cheeses from Fairway’s Steve Jenkins. He later published a book.

  2. timbers

    This presumably coming transformation of Morrisons via asset strippers – selling off her real estate assets, raiding her defined benefits plans for worker’s retirement, selling all her other assets, loading her up with crushing debt, then using it all to fund ginormous “performance bonuses” to themselves (the asset strippers) – has been brought to you buy Central Bankers of the world thru their polices of ZIRP and QE providing trillions of essentially free “capital” to asset strippers and others to do just these sorts of things..

    The performance bonuses will be paid out to the asset strippers long before the debt acquired to fund them drive Morrison into bankruptcy.

    1. Brooklin Bridge

      I think specifically today and for reasons I have no clue about (perhaps a week of almost solid rain – following a couple of days of sunshine following yet another week of almost solid rain, following…), I find this article more depressing by far than the usual news; Covid excepted. Ugg.

    2. Grumpy Engineer

      @timbers: Oh, yes. IMO, the NIRP/ZIRP and QE policies pursued by the central banks have done significantly more harm than good. The real problem they’ve caused isn’t general inflation (even through I suspect inflation has been deliberately underestimated), but is instead asset appreciation that is divorced from reality, and the use ultra-liquid conditions to purchase monopolies or to strip assets.

      When assets appreciate at rates far in excess of nominal inflation or wage growth, who does that benefit? The people who already have assets, of course. And the more you already have, the more you benefit. How else could Elon Musk’s net worth increase by $140 billion in 2020, even though revenues for both Tesla and Space-X have been less than $80 billion in total for all years both both companies existed? How else could Uber, Lyft, Snapchat, and other non-profitable “unicorns” lose billions year after year after year without going belly up? [And is that fair to competitors who don’t have access to the unlimited ZIRP/QE spigot to be able to lose money indefinitely?]

      And now that we have a lot of companies struggling from the side-effects of the COVID pandemic, there are new “investors” out there, armed with billions from the central banks, looking to scoop up companies on the cheap. Do they care about the long-term health of the companies (or even understand what they really do)? I suspect not.

    3. vlade

      It made it much, much more attractive. But it was performed even in environments that had interest rates in double digits.

      Looter’s gonna loot.

  3. Colonel Smithers

    Thank you, Lambert.

    I would quibble with MacFarlane’s contention that the Morrisons practice responsible capitalism. The firm operates the largest supermarket in my home town, taking over from an American firm, Safeway, in the noughties. The pressure on staff and suppliers has grown unbearably in the past half dozen years.

    The author is correct to highlight the vultures circling. That is one reason for the way the pandemic has been, ahem, managed.

    Where, one might think, are the representatives of workers? Yesterday, the TUC leadership spent the day protesting outside Charborough House, a stately home and estate of thousands of acres in Dorset, and asking the owner, Tory MP Richard Drax, sic, to hand over his several hundred acre Drax Hall plantation to the Bajan government. One might think the leaders of British workers may have more pressing matters closer to home. ‘‘Twas ever thus with British trade unionists.

    1. drumlin woodchuckles

      We used to have responsible capitalism during the New Deal. Practitioners of capitalism were forced to practice responsible capitalism by the heavy hand of the law. Perhaps we should have called it Ordered Capitalism under Law.

      Now we have Disordered Capitalism under Law Of The Jungle.

  4. Brooklin Bridge

    Speaking of asset plunder and amorality, is Blackrock significantly different than Blackstone? I know the two are closely related in origin (founders, etc.) but I understand Blackstone specializes in the kind of asset stripping horror show this article illustrates with Morrisons as example whereas Blackstone is largely an (and the largest) investment firm dealing in stocks and bonds.

    1. Colonel Smithers

      Thank you, BB.

      Blackstone tends to asset strip. BlackRock tends to be a long only investment firm, so dealing in stocks and bonds for longer time frames. This said, the latter is not averse to switching strategy when the chance to make money beckons. The latter is partly behind the move to, er, reform the French social security system and advises the French government.

      1. Yves Smith

        Blackstone is private equity. BlackRock is like Fidelity or Vanguard, except its customers are big institutional investors (like insurance companies, endowments, oh, and yes, public pension funds), not retail.

  5. Fazal Majid

    I’ve always wondered who the suckers are who lend money to these over leveraged acquisitions? After all, it’s not as if it is a new M.O,, there have been countless Hollywood movies made on the scam, Wall Street not least of all, and a default is practically guaranteed.

    1. WhatdoIknow

      The sucker is you , the taxpayer, through the Fed and other taxpayer funded programs.

    2. 1 Kings

      ‘Wolf of Wall Street’ glorified the a holes. The Big Short gave the Hollywood treatment and made it seem like a one time scam, not the perpetual asset-goosiing disaster capitalism we all know and love.

    3. Zamfir

      Keep in mind, the goal is usually not to push the company into bankruptcy. The goal is to put the company close to complete bankruptcy, and then keep it in that position for as long as possible. Once its in that precarious position, they know that the workers will work hard to keep the company afloat (and give up beneficial terms in their contracts). The same for other involved parties, like long-term suppliers and customers, or local authorities facing the closure of a large employer.

      The lenders make their money if the company keeps up that desperate state for long enough. If there is a bankruptcy, the lenders take control and use that occasion to force another round of cuts, then extend the game for more years.

  6. Sound of the Suburbs

    Any serious attempt to study the capitalist system always reveals the same inconvenient truth.
    Many at the top don’t create any wealth.
    That’s the problem.
    Confusing making money and creating wealth is the solution.
    Some pseudo economics was developed to perform this task, neoclassical economics.

    The classical economists identified the constructive “earned” income and the parasitic “unearned” income.
    Most of the people at the top lived off the parasitic “unearned” income and they now had a big problem.
    This problem was solved with neoclassical economics, which hides this distinction.

    Rentiers make money, they don’t create wealth.
    Confusing making money with creating wealth hides rentier activity in the economy.

    Everyone had expected economic liberalism to unleash capitalist dynamism.
    Instead there was a stampede towards the easy money of “unearned” income.
    In 1984, for the first time in American history, “unearned” income exceeded “earned” income.
    The rentiers have never had it so good.

    The best sort of money is easy money, which is why those at the top have traditionally kept it for themselves.
    Everyone loves easy money, hence the stampede in that direction with economic liberalism.

    You’ve just got to sniff out the easy money.
    All that hard work involved in setting up a company yourself, and building it up.
    Why bother?
    Asset strip firms other people have built up, that’s easy money.

  7. Sound of the Suburbs

    You’ve missed the early history in the UK.
    The early asset strippers like Jim Slater, James Goldsmith and Tiny Rowland led the way.
    Eventually, the UK realised what they were really doing.

    A BBC documentary looks back on those early asset strippers and their false claims
    Part 2 – Entrepreneur Spelt S.P.I.V.

    The game was over in the UK, so James Goldsmith went over to the US to introduce his asset stripping techniques to the Americans. (Part 3 – Destroy the Technostructure in link above)

    Asset stripping by activist shareholders may now be a global phenomenon, but it’s still as bad as it always was.

    The UK forgot what it had learned before and it came back.

    1. Colonel Smithers

      Thank you, SOS.

      Most, but not all, of the asset strippers remain in Mayfair. The firms often take their names from the street names.

      To the trio you rightly mention, I would add James Hanson and Gordon White of Hanson Trust. The pair also went to America. White’s daughter Sita bore a child there for playboy cricketer turned politician Imran Khan, who White hated.

      Thirty years ago, Rowland’s Lonrho, where some of my Mauritian relatives worked, mainly in agriculture, offered me a job, but I preferred to go to university and had yet to settle on a career path.

      1. upstater

        In upstate NY, Hanson acquired virtually all limestone and sand quarries and most all the mixed concrete services. In our county they own ALL the mineral rights for limestone other operators have to pay royalties. We don’t have to mention that pricing for stone and concrete now reflect Hanson’s monopoly. It is all according to plan.

      2. Grebo

        Imran Khan was also married to James Goldsmith’s daughter. There are a number of names you might recognise listed amongst his other conquests on Wikipedia. He is currently Prime Minister of Pakistan.

        1. Colonel Smithers

          Thank you, G. He met her at a night club in London. She was with her mother, Goldsmith’s mistress turned wife.

  8. Phil in KC

    I struggle to find some ethical justification for this process. If in the end the target of the stripping simply withers away and dies an untimely and undeserved death (Toys R Us, for example), then couldn’t a way be found to cushion the blow to employees and customers? I understand the Friedman-esque stricture to maximize shareholder profit, but at what expense? Don’t board members have any obligations to their employees below the C-level? Or to their customers, or to the public at large?

    I suspect this is a situation where the board and the C-levels take the money and run away from their friends, families, and communities to some sanctuary in the West Indies, maybe. Shows you what social ties mean to the offer of a big payout.

    1. saywhat?

      I struggle to find some ethical justification for this process. Phil in KC

      There is none because of present and/or past unjust wealth concentration via:
      1) No legal limits to the concentration of land ownership.
      2) Government privileges for private credit creation whereby what is, in essence, the public’s credit is deployed for private gain.

      Our system is such that the only way to avoid being a pure net victim is to join in the looting one’s self.

      1. JBird4049

        >>>Our system is such that the only way to avoid being a pure net victim is to join in the looting one’s self.

        Then we become Haitian, with the very few ruling families, their private ports, arms running, private gangs/armies, death squads, having to import everything, even firewood, because there is nothing left, not factories or even forests.

        In the end, there is nothing left to loot excepting an ever shrinking pile of leftover junk, such is capitalism’s efficiency.

  9. Carla

    “The question we must ask is: whose interest should the COVID-19 recovery serve?”

    I would say, “The question we must ask is: whose interest WILL the COVID-19 recovery serve?”

    Everything MacFarlane says about the UK of course, applies to the US only more so.

    Since “The answer can either be the general public, or it can be predatory capital. But one thing is clear: it can’t be both” — then the general public had better huddle with with Bernie, Matt Stoller, Michael Hudson and a few other insightful people to turn back the tide sharply.

    BTW, when used to modify “capital,” “predatory” is superfluous.

    1. CarlH

      Bernie is still alive? Seems to me he has done one of history’s great disappearing acts after imploring us to vote for his good friend Joe. Revolution my ass.

      1. Starry Gordon

        Bernie sends me lots of texts asking for donations, for example yesterday I got one asking for $27 for Nina Turner’s campaign. So unless he’s been stuffed and tied on a horse like El Cid, he’s still there texting for the Cause. I suppose the MSM might be disappearing him, but I don’t look at it, so I don’t know.

        One thing in the article above surprised me: ”city-centre commercial property values have plummeted”. Here in New York City, nothing causes real estate to plummet, because they still seem to be the objects, directly or indirectly, of the free money. Are things that different in the UK? I thought they employed similar practices to fatten the rich.

  10. R

    The fate of Morrisons is unarguable but private equity is just responding to incentives here and we are booing the wrong pantomime villain.

    Ask yourself this, why does Morrison’s balance sheet look so different from the other UK supermarkets. The answer is because the others are subject to Mr Market, which has also urged them into sale-and-leaseback arrangements on their property (in the 1990’s – it wouldn’t work now for public companies because of IFRS 16) and into commodification of their supply chain (just-in-time, no loyalty etc.). Morrisons had a core shareholder in the Morrison family, which thought on a longer time-scale.

    If you want to build long-term businesses, they *need* to be privately held. Otherwise the market will have them chopping up the furniture for firewood before you can blink. The primary problem is the stock market and the belief that management control can be infinitely subdivided and bought and sold without reference to the underlying real assets and trading.

    A secondary problem is the nature of the private owners. If you don’t want asset strippers, you need to reform the tax and company reconstruction rules. Removing the tax deductibility of interest would be a start (at least on a withholding basis paid up to offshore funds, so that it is taxed on exit). But you could also:
    – equalise the tax rate of income and capital gains
    – require all inward investment to be structured through a UK holding company and apply withholding taxes to offshore ultimate owners, preventing the private equity funds which are based off-shore from spinning up an off-shore property holding company and extracting the land from the UK tax net.

    The farmers are sitting ducks here. If their fat, rich union, the National Farmers’ Union (which is a major investor in PE!) had any sense, it would buy Morrisons, to preserve the existing vertical integration and provide its members with an alternative to those market-buying supermarkets.

    1. Colonel Smithers

      Thank you and well said, R.

      I have never understood why British farmers never emulate their French, Dutch and Danish peers, vide Credit Agricole, Brittany Ferries, Rabobank and Arla. Arla employs hundreds of people in the next village from here, Aston Clinton, much to the opposition of the locals, who don’t even want to work there.

      Don’t hold your breath with regard to the toff dominated and myopic NFU and the UK’s political class.

      1. vlade

        Coop fisheries work well, and Fonterra, NZ dairy milk coop (and 30% of world milk exports) is one of the reasons why NZ milk farmers were doing great. Even when it went public, the coop maintained the controlling interest (IIRC it was mostly to avoid issuance od debt, which is tricky with fluctuating milk production. The previous rules tied share ownership to milk solids production, which meant massive base-capital fluctuations. There were IMO other, better ways, but they would require more retained profits, which the farmers didn’t seem to be keen on).

        But coop doesn’t seem to catch in the UK, except for very small.

        1. Colonel Smithers

          Thank you, Vlade.

          Fonterra was a client of HSBC when I was there. The bank funded its expansion in Latin America. Again, farmers overseas having more foresight than their British peers.

          1. R

            A colleague sits on the board of an agtech company supplying Fonterra with services. With working capital finance from Rabobank. And investment from a family-held Breton farm supplies company.

            I know of one notable UK co-op, which is OMSCO, the organic milk producers coop, which was founded by the family behind Yeo Valley organic dairy because they could not produce enough milk on their own (the widow is in my mother’s extended bridge set, they call her Mrs Yoghurt).

            There may be others but the NFU is not for the little man nor the stockman. It is for the grain barons. I will watch the fate of the sugar beet farmers with interest under the Australian free trade deal.

            My father-in-law was regaling me with the story of the Irish sugar beet industry and three great abandoned mills by the river at Carlow (?). His brother-in-law has taken to farming housing developments instead. :-)

            1. Colonel Smithers

              Thank you, R.

              It will be interesting to observe as the Australia and other trade agreements get going and exchange comments here.

              My family and I are associated with the sugar industry in Mauritius and the African mainland.

            2. Colonel Smithers

              Thank you, R.

              With regard to the sugar beet barons, NFU president and Wiltshire beef farmer Minette Batters was initially ok with the Aussie deal and toed the government line, but soon changed her mind as the East Anglian sugar barons sounded the alarm and threatened the NFU’s funding.

              I watch the BBC’s Country File regularly and am disappointed with their coverage and analysis.

    2. vlade

      Hear Hear. I oft claimed (and Yves has a favourite academic to quote on this), that public markets are the way to fleece the public. It gives the management the vague “shareholders” to pretend to pander to, while looting, and allows vultures to swoop on eventually on the carracas.

      I agree on your other points too.

      Unfortunately, unions are only as good as what their members put into them (and even that doesn’t make them unarguable public good, see police unions).

  11. Edward

    I feel that political parties have been asset-stripping America. They deregulate or give away or privatize national assets in exchange for bribes.

    1. Edward

      Donald Trump sold pardons at the end of his presidency. A whistleblower– I think Kiriaku, requested a pardon and was told it would cost $1 million. I think Trump sold his Middle East policy to people like Adelson.

  12. Susan the other

    Maybe, not just in the UK, there won’t be enough food available to justify grocery stores. Only distribution centers. So just like the US and corporate raiders in the 80s, the UK is being picked clean while the picking is good. Before people realize. This is just another way to socialize losses and deep debt, and privatize “assets”. The whole thing should be recognized for what it is (privateer looting) and the government should step in. We need a legal mechanism for resolving capitalist (dependent on profit) enterprises that keeps the value of all those assets in public control.

  13. Mikel

    “The company reportedly owns 85% of its retail stores, more than any other supermarket. With a book value of £5.8bn, Morrisons real estate portfolio is worth nearly as much as the market value of the entire company, based on its current share price….”

    “The Great Reset”…

  14. Glen

    Britain being hit by Brexit and the pandemic is not in a good position to weather asset stripping. How does one prioritize properly when predatory capitalism is almost by design ignorant of climate change and how we should be dealing with it?

  15. vegeholic

    I have one question about this deal. It seems that everyone, including the shoeshine boy, knows all of the steps that will occur, selling assets, cutting costs, loading up with debt, looting the pension funds, bonuses to the looters, and, finally, bankruptcy for what is left of Morrisons. My question is, who loans money to an enterprise which is so transparently headed for bankruptcy? I understand that the interest rates will look attractive, but do the lenders not care about their principal?

    1. Colonel Smithers

      Thank you.

      Let me explain as a bank compliance officer turned compliance and risk management consultant.

      The bankster is / was concerned with the revenue from the loan that would generate his / her bonus, perhaps over a few years, and getting the loan in the first place, for which a bonus may be paid in full rather than be amortised. Any longer than a few years is not his / concern. If the banker is smart, he / she will move on once bonuses are received and avoid any loans souring on his / her watch / portfolio.

      Credit risk and a longer time horizon do not feature enough in considerations.

      1. vlade

        TBH, I blame the accountants, who believe that everything should be mark-to-marketed, no matter how nonsensical it is.

        That lead to massive drop in accrual accounting, and as a consequences the situation you describe above. A good bank still had good risk managers, who dropped massive provisions on all those fancy nor-really-MtMable things (CDOs, illiquid bonds, funky one-off derivatives, yuo name it). But the accoutants (and auditors) hate those provisions with passion – sometime for a good reason, as they can be used to smooth profits and hide things, but TBH, its their job to make sure it’s not so, not just put the signatures and stamps. Or maybe it was, these days it seems to be really the rubberstamp to meet the regulatory requirements and now and then pay the fines for not doing much else (or just pretending to).

  16. Jermey Grimm

    Neoliberal policies lead to a dismantling of economic ‘commonsense’, much as they have in the US. Private ownership escapes reporting scrutiny here and there. Is it really so difficult to design laws to require private enterprises to report as Corporate enterprises are required to do? In the end of things, the asset stripping of the UK is less important to me than the lack of articles bemoaning and detailing the asset stripping of the US. The UK’s handling of Brexit leaves me wondering why anyone should worry about what happens in or to the UK. Brexit was a total cluster-F–k!

    I believe asset stripping has only just begun — here in the US, and in the UK. How is it we in the US, are so crippled both in our abilities to enforce existing laws against such travesties, and so crippled in our abilities to create and enforce laws that would prevent and punish such travesties? As for the UK, they are toast. Brexit showed what they are made of. And I fear — the US is made of much lesser stuff than the UK.

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