Palmer & Harvey closes in on rescue deal

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 a 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.

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.