Private equity firm The Carlyle Group has invited a co-founder of convenience store McColl's to take a key role in its rumoured buyout of Palmer & Harvey (P&H), according to Sky News.
James Lancaster is reportedly being drafted in to join the grocery wholesaler as its non-executive chairman, in a deal aimed to salvage the future of the debt-laden company.
Lancaster became chief executive of McColl's in 1990, after co-founding the business in 1973. He led the company through a management buyout, a secondary buyout and a stock market float, before becoming non-executive chairman in 2016 and stepping down this year to take the role of non-executive director.
Carlyle, which formerly owned breakdown service RAC, was close to entering into exclusive negotiations with P&H on Sunday, Sky News reported. Any agreement reached would provide welcome certainty to P&H's 4,000 employees.
As the UK’s biggest tobacco distributor, it supplies Tesco, Sainsbury’s, One Stop and Moto, among other convenience retailers. It serves around 90,000 stores from local corner shops to big-name supermarkets.
In its most recent accounts for the year ended April 2016, filed last October, P&H's chairman and chief executive Chris Etherington said that market consolidation in the convenience sector was benefiting P&H.
“Ongoing consolidation on the high street increases demand for P&H's product range and cost efficiencies,” he said. “We have also acted as a leader in the consolidation of the distribution sector, through the Costcutter partnership we signed in 2014.”
But ironically, the announced tie-up between Tesco and wholesaler Booker may have caused problems for P&H as it throws uncertainty on the long-term future of Tesco and P&H's relationship.