150 Scottish jobs to be lost as cigarette supplier collapses

About 2,500 staff have been made redundant at Palmer & Harvey after it collapsed into administration despite attempts to secure a lifeline for the troubled wholesaler.

The P&H premises in Dunfermline

The 90-year-old firm has appointed PwC as administrators after “challenging trading conditions” heaped pressure on its cash flow and efforts to revive the business failed to take hold.

Around 150 employees in Scotland will lose their jobs.

The group entered exclusive takeover talks with the Carlyle Group last month, but the US private equity fund’s offer of a significant capital investment in exchange for a controlling stake did not progress.

P&H, the UK’s biggest supplier of cigarettes, employs about 3,400 people and provides alcohol, groceries and frozen food to 90,000 retail accounts, including Tesco.

PwC said there would be 2,500 immediate redundancies at the firm’s head office and branch network, with 900 staff remaining 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.”

P&H had been working with stakeholders Imperial Brands and Japan Tobacco International as it searched for relief from thin profit margins and a substantial debt burden.