Time for tea? Time for talks more like

Urgent talks with Unilever called for, as PG Tips sold to private equity firm at heart of Debenhams’ demise

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Unite has called for urgent talks with consumer goods giant Unilever, following the sale of its tea division to private equity group CVC Capital Partners, part of the group at the heart of the collapse of high street giant Debenhams. On Friday November 19, Unite warned that the private equity sale of the UK’s second most popular tea brand could end up as ‘another case of corporate betrayal.’

The call for talks follows Unite negotiating three years of protected terms and conditions at Unilever’s tea factory, the home of the iconic PG Tips, at Trafford Park, Manchester, where the union has 300 production and engineering members. The business being sold is now called Ekaterra.

‘Fatal pattern’

“The story of private equity buy-outs in the UK very often has a fatal pattern of debt loading, asset stripping and job cuts as short-term shareholder dividends soar,” commented Unite general secretary Sharon Graham.

“We will not allow another case of corporate betrayal to ruin another iconic product.

“The sorry consequences of CVC’s so-called ‘investment’ in Debenhams, which crashed last December, are there for all to see with hundreds of shops shut and thousands of jobs gone. 

“Unite will be demanding urgent meetings with management to ensure solid safeguards are in place in relation to employee job security, and their pay and conditions,” she added. 

Sharon Graham continued, “We are determined that the new business has a secure future in the UK and is not further broken up for a quick profit. We will be seeking a cast iron guarantee, in particular, for the future of the Trafford Park site.”

CVC Capital was part of a private equity consortium that paid £1.7bn to take over Debenhams on May 2006. The purchase was financed by loading Debenhams’ balance sheet with debt.  

Shareholders pocketed £1.2bn

The consortium also remortgaged some of the stores resulting in Debenhams paying sky-high rents on property that they once owned. Investment in the stores was ceased and staff were made redundant – but shareholders pocketed £1.2bn.

In April 2020, Debenhams was still carrying £600m in debt.

“The UK is a nation of tea drinkers and the loyal consumers, who put PG Tips in their shopping basket every week, will expect that UK workers are treated with decency and respect, not trampled over in the stampede for boardroom riches,” said Unite national officer Rhys McCarthy.

“Unite is determined to ensure that the security and future of the workers are at the centre of this sale. We are seriously concerned that CVC is a company with no track record in this sector and comes with a history of bringing instability and dis-investment to our high street.

“Unite has repeatedly urged Unilever not to succumb to the cult of quick growth that has wrecked so many sustainable businesses and the jobs that come with them simply to appease stock market players,” he added.

Unite is dedicated to advancing the jobs, pay and conditions of its members and will fight back against any efforts to diminish workers’ living standards.

By Shaun Noble

Pic by John Keeble/Getty Images

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