Grocery wholesale giant plots sale weeks after rescue deal
Advisers have been hired to oversee a possible sale of P&H, one of the UK's biggest private companies, Sky News learns.
By Mark Kleinman, City Editor
Britain's biggest tobacco distributor is to be put up for sale just weeks after sealing a financial rescue package led by two of the world's largest cigarette makers.
Sky News has learnt that Palmer & Harvey (P&H) could change hands within months after creditors decided to use last month's refinancing to explore a change of ownership.
PricewaterhouseCoopers (PwC), the professional services firm, is understood to have been asked to supervise a sale process for P&H, which counts J Sainsbury and Tesco as its biggest customers.
The move to sell the business, which is owned by current and former employees, is said to have been instigated by P&H's creditors, with Imperial Brands and Japan Tobacco International (JTI) now ranking among the largest of those.
Last month, Imperial and JTI agreed to lend substantial multi-million pound sums to P&H to secure its immediate future.
Between them, Imperial and JTI own cigarette brands such as L&B and Silk Cut.
In a statement issued to Sky News on Wednesday night, a P&H spokesman said: "We do not comment on market speculation.
"Palmer & Harvey recently completed a successful refinancing of the business, and we are focused on capturing the opportunities within our market."
Grocery industry sources said the tobacco companies remained the likeliest purchasers of the business, although some analysts speculated that a number of big retailers could also be interested.
P&H, which employs about 4000 people, is a crucial part of Tesco's supply chain, distributing tobacco to every store owned by the UK's biggest retailer.
Tesco accounts for roughly 40% of its revenues.
As well as being one of the UK's biggest private companies by sales, P&H is also among the biggest to be owned by its current and former workforce.
Lenders to it, which include Barclays and Royal Bank of Scotland, had become increasingly anxious about the potential ramifications of Tesco's proposed £3.7bn acquisition of Booker.
The extent of P&H's revenues dependent upon the UK's biggest retailer has stoked fears that a huge chunk of its business could shift to Booker if the takeover is completed.
However, a crisis at P&H would also damage Tesco's argument that the Booker takeover would not infringe competition in Britain's grocery supply industry.
Booker owns the Budgens and London fascias, although Tesco has argued that they are operated using a franchise model, and should not be used to justify rivals' arguments that the deal is anti-competitive.
The Competition and Markets Authority is widely expected to refer the deal to a so-called Phase-II inquiry, which would elevate it to the most rigorous level of anti-trust scrutiny.
P&H was established in 1925 as a tobacco and sweets wholesaler, and is the biggest distributor to the UK's convenience sector.
It serves about 90,000 outlets across the country, using a fleet of 1,300 vehicles.
The company is run by Tony Reed, a former boss of Tesco's convenience retailing business, who joined just a few months ago.