Palmer & Harvey enters rescue takeover talks with Carlyle

The future of 4,000 Palmer & Harvey workers looks close to being secured after the wholesaler finally entered exclusive takeover talks with Carlyle private equity.
Palmer & Harvey, which supplies Tesco and corner shops across the country, has been locked in an urgent scramble to raise cash since the start of the summer as its wafer-thin profit margins have come under further pressure from rising costs.
The wholesaler said that a takeover by Carlyle would "provide a strong financial platform" but that the deal remained subject to ongoing due diligence.
It is understood that Carlyle's takeover is also conditional on cigarette giants Imperial and Japan Tobacco rolling over loans worth ?60m. The makers of Davidoff and Camel cigarettes have also provided additional funding to keep the business solvent while a sale can be agreed. 
Palmer & Harvey enters rescue takeover talks with Carlyle

Camel cigarette maker Japan Tobacco and Imperial Tobacco are also involved in rescue talks
Imperial and Japan are keen to ensure the survival of Palmer & Harvey, as it has a valuable distribution channel and supplies cigarettes to 90,000 shops across the country. But neither wanted to own the business outright or take on its debt. 
The blessing of Tesco, which accounts for 40pc of Palmer & Harvey's revenue, is also essential to any deal. The supermarket has already agreed to extend its distribution deal for three years, but this may be extended.
Palmer & Harvey's cash crisis has been accelerated by Tesco's pending takeover of Booker. Industry experts have warned that if Tesco shifts its business from Palmer & Harvey to Booker, P&H's survival would be threatened.
Rival wholesaler Bestway has written to the UK's competition watchdog, which is in the process of approving the Booker deal, warning that "even a small reduction in volume would fundamentally impact P&H’s viability as a going concern".
Palmer & Harvey said that it was "grateful to all parties for the time invested in exploring the opportunities presented".
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