The private equity eyeing supermarket Morrisons has lined up an entity in the tax haven Grand Cayman to run the supermarket giant, bid documents have revealed.
Cross-party MPs have urged Clayton, Dubilier & Rice (CD&R) to assure it will pay UK corporate tax rates on Morrisons’ turnover, the Sunday Times reported.
CD&R revealed full details of its recommended £10bn bid before a vote by Morrisons shareholders, outlining that an entity called Market21 GP Holdings had been lined up in the Cayman Islands.
Conservative back-bencher Kevin Hollinrake said he would write to former Tesco boss Sir Terry Leahy, who is leading CD&R’s bid, for assurance the firm will not dodge UK taxes.
“We should expect CD&R to set out very clearly that they’re going to pay UK rates of corporation tax,” Hollinrake said.
Darren Jones, a Labour MP who chairs the Business, Energy and Industrial Strategy Committee, told the newspaper: “The idea that private equity can just sweep in, buy up British businesses and then move them off-shore to reduce the amount of tax they pay, without any rules or regulatory interventions, is just madness and an insult to British taxpayers.”
It comes after Asda was owned offshore through an entity based in Jersey, following its acquisition by billionaires the Issa Brothers.
A CD&R spokesperson said the supermarket would “remain registered in the UK, headquartered in the UK and continue to pay taxes in the UK,” if the firm’s bid was successful.
Morrisons paid £47m in UK corporation tax in its latest financial year, down from £60m in 2020.
The offer has been recommended by board members but still faces the threat of a challenge by rival buyout firm Fortress, with potential for blind bids next month.
The documents set out that bankers, lawyers and public relations advisers were set to receive fees of more than £400m if the bid succeeds. CD&R’s bid values Morrisons at £9.7bn including debt.