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Palmer & Harvey, the food wholesaler that merged with the Costcutter convenience store operator four years ago, has fallen into insolvency with the loss of 2,500 jobs.
Administrators PwC said they were retaining another 450 employees to run the business, which supplies 90,000 supermarkets and corner stores across Britain.
“This is a devastating blow for everyone who has been involved,” said Matthew Callaghan, a PwC partner who is acting as joint administrator.
Hopes that the entire business could be sold evaporated on Tuesday. The company was only able to meet the November payroll with the support of secured creditors.
PwC said it would work to wind down the business smoothly over the next few weeks. It said it was still marketing some parts of the business in the hope that a buyer could be found.
P&H was a competitor of Booker Group, the food wholesaler that this month received competition clearance to be taken over by Tesco, Britain’s biggest grocery chain.
P&H was also a supplier to Tesco, and had warned that if it lost the custom of the merged group, this would “have a serious impact on [its] efficiency, pricing and operations.”
It had also argued that the deal would give Booker access to cheaper supply deals than those available to rival wholesalers.
However, regulators sided with Tesco chief executive Dave Lewis, who argues that the deal has little effect on competition because it involves moving into a wholesale market in which the supermarket group has no existing presence.