Sir Terry Leahy hailed the ‘heritage and culture’ of Morrisons last night as he prepared for a dramatic return to the grocery sector’s frontline.
The former Tesco chief executive, 65, is tipped to become chairman of Morrisons after the supermarket group’s shareholders rubber-stamped its £7billion takeover by private equity group Clayton, Dubilier & Rice yesterday.
A whopping 99 per cent of Morrisons shareholders backed the 287p a share offer – with the deal set to be completed by April next year.
Former Tesco chief exec Sir Terry Leahy (pictured), is tipped to become chairman of Morrisons after shareholders rubber-stamped its £7bn takeover by Clayton, Dubilier & Rice yesterday
That will see the supermarket – which was founded by William Morrison as an egg and butter stall in Bradford in 1899, and listed on the stock exchange in 1967 – pass into foreign ownership.
The takeover marked a major victory for Leahy, who works for CD&R and orchestrated the private equity group’s campaign to win control of Morrisons.
That included defeating rival private equity bidder Fortress and overcoming stiff opposition to the deal amid fears over the future of Morrisons, its 111,000 UK staff and 497 stores.
Senior figures in Westminster and the City have warned that the company, which owns its own food manufacturing plants, could be broken up and its assets sold.
The debt-fuelled sale will raise the company’s costs, making it more vulnerable if performance dips or interest rates rise.
In a bid to allay those concerns last night, Leahy said: ‘The particular heritage, culture and operating model of Morrisons are key features of the company and we will be very mindful of these during our tenure as owners.
‘We very much look forward to working with the Morrisons team, not just to preserve the company’s many strengths – but to build on these, with innovation, capital and new technology – helping the business realise its full potential and delivering for all of its stakeholders.’
Morrisons chairman Andrew Higginson added: ‘We remain confident that CD&R will be a responsible, thoughtful and careful owner of Morrisons.’
The deal will reunite Leahy with Morrisons chief executive David Potts and finance chief Trevor Strain, who were executives together at Tesco. Higginson was also at Tesco but is likely to be replaced by Leahy after the CD&R takeover.
Potts, who has described Leahy as a mentor, last week said he will continue as chief executive, quashing rumours he will retire.
He could scoop as much as £22million from the deal while Strain could get £12.9million and finance director Michael Gleeson up to £4.1million.
Morrisons is the second supermarket to be bought by private equity in 12 months, after Asda was sold to the Issa brothers and TDR Capital last year.
There are now just two listed supermarkets remaining – Sainsbury’s and Tesco – with both believed to be potential private equity targets in future.
Leahy stood down as chief executive of Tesco in 2011, having become one of Britain’s most respected business leaders.
The supermarket supremo grew up on a Liverpool council estate as the third of four brothers, and attended his local grammar school.
He was the only one of his siblings to stay at school past the age of 16. He started at Tesco in the marketing team in 1979 after graduating from the University of Manchester Institute of Science and Technology in management sciences.
He was a key player in the development of the supermarket’s Clubcard.
At 40 he became chief executive and increased the company’s market share from a fifth to 30 per cent, developing a reputation as a tough and blunt operator.
He expanded into a dozen markets, including in Eastern Europe and Asia, and bought up convenience locations which became Tesco Express stores. In 2010 it made a profit of £3.4billion.
But he also came under fire for aggressive pricing tactics that harmed consumers, leading the Government to create an ombudsman to monitor supermarket behaviour.
Now CD&R swoops on PWC arm
Clayton, Dubilier & Rice’s thirst for a deal shows no sign of waning, with the US giant buying a division of PwC.
Fresh from snapping up Morrisons for £7billion, CD&R has splashed £1.6billion on PwC’s global mobility services arm, which advises companies on tax and immigration issues when they move staff overseas.
It is CD&R’S fourth major deal in the UK this year and is PwC’s biggest disposal since the accountancy giant sold its consulting division to IBM for £2.5billion in 2002.
The sale is the latest in a string of disposals by PwC and its Big Four consulting rivals – Deloitte, EY and KPMG – to private equity firms.
PwC’s mobility division employs 5,700 people, but no revenue or profit figures are released for the arm. PwC employs 295,000 globally and has group revenues of £32.6billion.
CD&R believes the business is well-placed to benefit from a rebound as travel restrictions ease.