Time to take action against the venture capitalists

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A BIDDING war between warring groups of venture capitalist locusts has broken out over who is to asset strip Boots.

Yesterday morning, the Boots board backed a £10.6bn takeover bid from Kohlberg Kravis Roberts (KKR) and Boots’ deputy boss Stefano Pessina.

The rival bid comes from a group that includes private equity firm Terra Firma, and an alleged medical charity, The Wellcome Trust, and the banking group HBOS.

The assault on Boots comes after the Texas Pacific-led raid on the Sainsbury supermarket chain collapsed when the raiders could not satisfy the Sainsbury family demand for £6 a share.

It also comes after the IMF issued a warning that higher interest rates could see the collapse of the private equity raiders, overwhelmed by the cost of servicing the giant debts that are their trademark.

Alliance Boots is best known in the UK for its 2,600 Boots the Chemist shops on the High Street, and its 400 overseas outlets in countries including Thailand and Italy.

The group also supplies more than 125,000 pharmacies, health centres and hospitals.

Into whose hands the group falls will have a devastating effect on many workers’ jobs and in the NHS.

Already the GMB has predicted that 160 branches of Boots will be closed.

GMB leader Paul Kenny has written to health secretary Hewitt, warning her ‘that if the £10.1 billion private equity deal for Boots goes ahead, the company will be loaded with debt and be forced to close hundreds of Boots stores serving local communities to pay interest on these massive debts.’

He added: ‘Earlier this week the IMF published its “Global Financial Stability Report”, which said that a large-scale collapse in the private equity industry is increasingly possible.’

Kenny continued saying: ‘Boots profits for the year to the end of March 2007 are projected to be around £480 million. The interest payments on the £7 billion of debt to be taken out by the private equity industry to fund the purchase of £10.1 billion will amount to more than £500 million per annum. Our members would be grateful if you could ask for assurances that the 131 pharmacies serving outlying areas will not be closed to pay for this private equity takeover.’

Kenny adds ‘the private equity industry plan to securitize the income from the over £1 billion worth of NHS contracts with Primary Care Trusts to raise money to pay for the purchase of Boots. We would like you to seek assurances that NHS contracts like these will not be subject to such financial engineering. . .’

Karen Jennings, UNISON Head of Health, commented: ‘Patricia Hewitt wants to see GP surgeries based in supermarkets and shops like Boots, but when private equity firms come along their interest will be in making a quick buck or asset-stripping, rather than any concern for the health needs of communities that may be served by GPs or other health services potentially based in Boots.’

The trade unions, even the TUC, are speaking out against the union busting, job busting, and wage cutting private equity companies, who have the complete support of the Brown-Blair government.

However, it is the responsibility of the trade union leaders that things have reached this stage in the UK.

In September 2006 the TUC Congress passed an emergency resolution demanding that every trade union take action to support the locked out Gate Gourmet workers who had been sacked by megaphone by the Texas Pacific-owned company.

TGWU leader Woodley spoke of his readiness to go to jail over the issue as he moved the motion.

Two weeks later Woodley and Brendan Barber, the TUC leader, made a deal with Gate Gourmet, agreeing to mass sackings, and its survival plan, for which they were profusely thanked by Gate Gourmet.

Now the tide is turning, and the anger of millions of workers is forcing the TUC leaders to speak out against the venture capitalists.

The TUC must be forced to take action to drive them out of Britain. At the top of their list of demands must be the reinstatement of all the sacked Gate Gourmet workers on their original terms and conditions of service. This is a wrong that must be righted, since the betrayal of Gate Gourmet workers encouraged the venture capitalists to think that they could do what they liked.