- Tuesday, April 23, 2024
By: Chandrashekar Bhat
UK SUPERMARKET giant Morrisons announced on Monday (9) it had agreed a rescue deal for British convenience store chain McColl’s that will preserve all 16,000 jobs.
Morrisons, Britain’s fourth-largest supermarket chain, beat off competition from forecourt giant EG, whose co-owners – the billionaire Issa brothers – also run UK supermarket group Asda.
McColl’s went bust on Friday (6) in the wake of supply strains and weak consumer spending as inflation soars.
The food and household products seller, which had around 1,100 UK stores, entered administration – the process whereby a distressed company calls upon outside help to try and minimise job losses – and plunged 16,000 staff into uncertainty.
“All McColl’s colleagues will be transferred with the McColl’s business to Morrisons,” the supermarket said as it confirmed the deal.
Morrisons chief executive David Potts said it represented “a good outcome” for McColl’s stakeholders.
“This transaction offers stability and continuity for the McColl’s business and, in particular, a better outcome for its colleagues and pensioners,” he added.
Both Morrisons and EG tabled final bids on Sunday (8) after McColl’s administrators PricewaterhouseCoopers sought a buyer for the chain.
Morrisons already operates about 200 of its stores under the ‘Morrisons Daily’ brand.
It is understood that Morrisons’ successful move will see it repay more than £160 million in McColl’s debts, and take over the company’s two pension schemes.
McColl’s troubles come with Britain enduring a cost-of-living crisis, as UK annual inflation sits at a 30-year high of seven percent.
The Bank of England last week warned that British inflation would top 10 per cent, a four-decade high, by the end of the year, fuelled by soaring energy prices.
And the BoE added that Britain risks falling into recession, as the central bank on Thursday (5) raised its main interest rate by a quarter point to one percent – the highest level since the global financial crisis in 2009.
Consumer prices are surging worldwide on supply strains as economies reopen from pandemic lockdowns — and in the wake of the Ukraine war that is aggravating already high energy costs.
Britain’s cost-of-living crisis was blamed in part on British Prime Minister Boris Johnson’s Conservative party losing control of key councils in local elections last week.
On Monday a UK think tank, The Food Foundation, revealed a 57-per cent surge in the proportion of British households cutting back on food or missing meals altogether between January and April.
