Leahy stamps his approval on Tesco’s bid for Booker

Long-serving former boss says controversial takeover is a ‘front-foot’ play by the supermarket behemoth

THE former chief executive of Tesco, Sir Terry Leahy, has given his blessing to the supermarket’s controversial £3.7bn takeover of wholesaler Booker and said that it was a “front-foot play” by Britain’s biggest retailer.

Sir Terry said he supported the move in his first public comments about the deal and praised Tesco for being proactive despite a tough market environment due to the weaker pound and fierce competition from discounters Lidl and Aldi.

“What I like about it is that it’s a front-foot play,” Sir Terry said at a City event run by software firm Eagle Eye and first reported by the Evening Standard. “Clearly the supermarket sector has faced challenges in a long recession. But you can’t just sit there and complain your environment is unsuccessful.”

The retail veteran added that there was “good value to be created” and that Booker would gain some of Tesco’s “world-leading” skills when it came to customer relationship management.

Under Sir Terry’s reign, Tesco became the world’s third-largest retailer but he stepped down in 2011 after 14 years at the grocer’s helm to take a series of executive roles, including chairman of Eagle Eye and B&M Bargains. He has previously blamed his successor Philip Clarke for a “failure of leadership” which he argued led to the accounting crisis that engulfed the company four years ago.

Sir Terry’s backing for the Booker deal will be welcome news for Tesco’s board which has already suffered a protest resignation by highly respected senior independent director Richard Cousins. Top investors Artisan and Schroders have also urged the board to abandon the takeover.

Meanwhile, current Tesco boss Dave Lewis had his pay docked last year despite overseeing the grocer’s first rise in UK sales for seven years and driving a turnaround that pushed profits beyond £1bn.

The chief executive’s total pay package fell 10pc to £4.1m from £4.6m the year before after not reaching the same stretching targets for operating profits. He still received a 189pc bonus on top of his salary, worth £2.4m. His base salary remained unchanged at £1.25m, according to Tesco’s annual report.

The report also reveals that Mr Lewis received £142,000 in “relocation fees” after the supermarket paid stamp duty and legal bills for the chief executive’s new home closer to Tesco’s new headquarters in Welwyn Garden City.

Mr Lewis culled 2,000 head office jobs in 2015 when he shut Tesco’s Cheshunt headquarters, where the supermarket had been based for two decades, to move to an industrial park in Hertfordshire.

Tesco’s full-year profits were dented by its £129m fine from the Serious Fraud Office and £85m in compensation to shareholders over the accounting scandal in 2014.

Mr Lewis has steered the supermarket back to recovery by selling off a series of non-core businesses including Giraffe restaurants and South Korea supermarkets, shutting unprofitable stores and boosting sales by being more competitive on price.

Mr Lewis said: “Over the last two and a half years we have done an awful lot within Tesco and I’m personally very pleased with the progress that we have made. But we are very clear that there is much more that can be done to improve the business further.”

Tesco will also face cost inflation from the weaker pound, although Mr Lewis has said that he was determined to keep shop prices low.