Sat. Oct 16th, 2021


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Clayton, Dubilier and Rice are set to appoint Sir Terry Leahy as chairman of supermarket group Wm Morrison after winning the £ 10bn victory battle for the British grocer, according to two people briefed on the plans of the private – equity firm.

Leahy, who has been CEO of Tesco’s UK grocery market for more than a decade, has been a senior adviser to CD&R since leaving the supermarket group in 2011. with only one cent per share in an auction process conducted by the UK takeover regulator on Saturday.

“There are very strong indications that he will become a chairman,” said one of the people. “It will follow a similar model to B&M,” he added, referring to the discount retailer chaired by Leahy for five years after CD&R acquired a majority stake in it in 2012.

‘I would expect him to be a relevant non-executive chairman,’ said another person, adding that CD & R’s usual modus operandi at investment firms was to set up a board with a mix of internal and external appointments.

Leahy’s expertise in buying and marketing is particularly complemented by the skills of Morrisons CEO Dave Potts, who is known for his organizational skills and attention to detail.

Leahy, 65, is also a director of Motor Fuel Group, the CD-R gas station chain that is expected to be part of any expansion of Morrisons’ convenience store.

Morrisons’ existing non-executive officials, including chairman Andrew Higginson and senior independent director Rooney Anand, will resign once the deal is finalized in late October, after a bidding war was organized that raised the price from an initial 230p per share to almost 290p has risen.

The takeover has yet to be approved by shareholders at a meeting to be held on October 19th. Columbia Threadneedle, one of Morrisons’ largest shareholders with a stake of about 8 percent, announced late Saturday that it would accept the offer.

Terry Leahy

Terry Leahy is a director of Motor Fuel Group, the CD and R petrol station chain, which is expected to be part of any expansion of Morrisons’ convenience store business © Denis Doyle / Bloomberg

Potts’ team will continue to run the business on a daily basis. In its presentation documentation, CD&R emphasizes that it is’ committed to supporting the existing team ‘that’ has built the differentiated customer proposal and excellent in-store execution ‘that defines the business today’.

‘CD&R will support Morrisons to build on these strengths [it] has done successfully over the years with a number of its portfolio companies. ”

CD&R, Leahy and Morrisons declined to comment.

Many analysts have assumed that Potts, who is 64 and has run Morrisons since 2015, would have resigned this year or next if it were a public company, with chief operating officer Trevor Strain the most obvious internal candidate to replace him.

It is less clear how and when this sequel can play out now. Those who know him say Potts was re-energized by the challenges of the pandemic. Morrisons’ reactions to it, especially in the first few months when it launched new initiatives, such as deliveries in groceries, were widely praised.

Another complicating factor is the situation in Asda, where Roger Burnley resigned as CEO in August following its acquisition by TDR Capital and the Issa brothers earlier this year.

The company is looking for a replacement and the third largest grocery store in the UK is on paper an attractive opportunity for people like Strain and other senior executives at competitive supermarkets — especially since the most likely internal candidates at Asda everyone left.

But those familiar with the business say Mohsin Issa spends more time at his Leeds headquarters and becomes more involved in decision-making, raising questions about how much independence an incoming CEO can have.



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