Palmer & Harvey on brink of administration, risking 4,000 jobs

Wholesaler Palmer & Harvey are expecting to enter administration, putting 4,000 employees are risk just before Christmas.

Sky News reported on Tuesday that the company are expecting to fail following a series of unsuccessful takeover talks with the private equity firm Carlyle (NASDAQ:CG). 

Following the talks, Palmer & Harvey said that it was “grateful to all parties for the time invested in exploring the opportunities presented”.

As the UK’s biggest wholesaler, Palmer & Harvey is a major supplier to big supermarkets as well as small convenience stores across Britain. The firm employs 4,000 people as well as supplying alcohol, groceries and frozen food to 90,000 retail accounts, including supermarket giant Tesco.

According to Sky, sources have said the company has been hit by a “working capital problem” that might prevent it from being able to continue trading. However, there are still hopes that the company can continue due to a salvage package from lenders as well as dependence on the tobacco industry.

The potential deal with Carlyle was expected to lead to a pre-pack administration but would have left Palmer & Harvey continuing to trade and buoyed by an investment worth up to £120 million.

The move towards administration comes amid news that Tesco (LON:TSCO) recently agreed to a £3.7 billion deal with the wholesaler Booker (LON:BOK). In addition to this, Nisa Retail has received the go-ahead for a  takeover from the Co-op.

The Competition and Markets Authority (CMA) allowed the Tesco-Booker deal earlier this month following an in-depth investigation. They concluded that the deal would not lead to higher prices or hit service for shoppers.

“Our investigation has found that existing competition is sufficiently strong in both the wholesale and retail grocery sectors to ensure that the merger between Tesco and Booker will not lead to higher prices or a reduced service for supermarket and convenience shoppers,” said chair of the inquiry group, Simon Polito.