2,500 job losses as tobacco wholesaler goes into administration

Some 2,500 staff have been made redundant following the collapse of tobacco wholesaler Palmer & Harvey, which has a major presence at Haydock on Merseyside, into administration.

The company has appointed PwC as administrators as a result of “challenging trading conditions”.

Talks with US private equity fund Carlyle Group over a possible takeover took place in October but appear to have come to nothing.

P&H is the UK’s largest supplier of cigarettes but also supplies alcohol, groceries, and frozen food to 90,000 retail outlets, employing a total of about 3,400 people.

PwC said there would be 2,500 immediate job losses at P&H’s head office in East Sussex and its branch network and that the remaining 900 staff are also at risk.

Matthew Callaghan, joint administrator and PwC partner, said: “This is a devastating blow for everyone who has been involved in the business.

“The administration team will focus on working with employees, clients and suppliers to facilitate a smooth and effective wind-down or transfer of operations over the next few weeks.

“The P&H Group has faced a challenging trading environment, and the need for significant restructuring has been recognised for some while.

“The company has insufficient cash resources to continue to trade beyond the short term and the directors have concluded that there is no longer any reasonable prospect of a sale.

“Therefore, the directors have had no choice but appoint administrators.”

P&H had reportedly been working with stakeholders Imperial Brands and Japan Tobacco International to find relief from thin profit margins and a substantial debt burden.

A spokesman at Japan Tobacco International (JTI) said: “JTI can confirm it was informed today that Palmer & Harvey had unfortunately entered administration.

“Throughout the whole process JTI has worked continuously to facilitate a constructive solution to the P&H Group’s challenges including extending significant financial and operational support to allow P&H to continue its operations.

“Regrettably our considerable efforts were not successful.

“We have a contingency plan in place and we do not expect any significant interruption in the supply of our products.”

Mark Jones, food and drink lawyer at Gordons law firm, said: “The administration of P&H seemed inevitable. Its been struggling to make money for a while, it lost £17m in the year to April 2016 and over £8m the year before that.

“The business had a heavy reliance on tobacco and tobacco companies. Its largest customer, Tesco, which accounted for 40 per cent of its revenue, just bought P&H’s biggest rival. Notwithstanding the troubles P&H faced, I do expect there to be plenty of bidders for the business.

“You’ve seen Tesco, Sainsbury’s, the Co-Op and Morrisons make moves to grab market share in the last year or so. You can therefore expect one of the large retailers to be interested in this wholesaler, and my money is on Sainsbury’s.”

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