Morrisons is looking to sell assets in order to reduce debts.
The Bradford-based retailer has teamed up with Deloitte in order to attract interest in Rathbones Bakery, a Wakefield factory that provides baked goods to Morrisons supermarkets.
Rathbones is still in the early stages of discussions and there’s no guarantee that it will be sold.
Industry sources have suggested that Endless, the private equity firm which owns Hovis as well as Bright Blue Foods and Hovis, could be interested in purchasing Hovis.
Rathbones produces over 50,000 tonnes of baked goods each year. These include crumpets and bread rolls, as well as hot cross buns.
Rathbones is owned by Morrisons since 2005, when it saved the company from administration. Morrisons is different from most supermarkets in that it owns a number of manufacturing plants and farms.
David Potts said that the business model was making it more difficult to control costs as inflation increased in 2023.
Since many years, speculation has persisted about the sale of the company’s manufacturing sites. However, the bosses recently tried to downplay the possibility of such a transaction.
Rami Baitieh, Morrisons chief executive since last year’s takeover, has stressed the importance of Morrisons manufacturing sites.
He said earlier this month: “Our manufacturing and production centres, as well as our relationship with over 3,000 British Farmers, are all strengths for Morrisons.
My priority is to find ways to improve our manufacturing system and model, and to innovate and increase productivity.
Rathbone Kear’s accounts reveal that the company made a pre-tax profit of £737,000 on sales of £62m.
Rathbones, if it were to be acquired by Clayton, Dubilier & Rice, a US private equity firm, in 2021, would have debts totaling more than £5bn, which could help Morrisons reduce its debt.
Last month, the supermarket agreed to sell 337 petrol stations to Motor Fuel Group for a total of £2.5bn. The money will be used in part to settle debt.
Morrisons has also been fighting to reclaim the market share that Aldi and Lidl had lost to German discounters due to the cost-of-living crisis.
Aldi will overtake Morrisons as the UK’s 4th largest supermarket by 2022.
Morrisons’ market share has grown over recent months amid a push by Mr Baitieh to “reinvigorate” the Bradford-headquartered supermarket.
In January, Mr Baitieh said that Morrisons was not “on top form”, but he promised to turn around the company.
His strategy includes a focus on customers of the grocery store, who he invited to share their views on various issues.
Morrisons has also started matching the prices of Aldi, Lidl and other discounters this month to entice shoppers away from these retailers.
Morrisons and Deloitte have declined to comment.