LONDON (Reuters) - Tesco (TSCO.L), Britain’s biggest retailer, said Booker (BOK.L) boss Charles Wilson would stay on and run its entire UK business once it completes the 3.7 billion pounds ($5.2 billion) takeover of the wholesaler.
Tesco also forecast profit for 2017-18 would come in slightly ahead of analysts’ expectations, adding it had traded in line with management expectations since it last updated investors on Jan. 11.
Tesco’s purchase of Booker is the boldest move yet by its Chief Executive Dave Lewis, who took over in 2014, providing the supermarket group with access to the faster growing catering segment of Britain’s 195 billion pound food market.
After completion of the deal, Wilson, who has led Booker since 2005, will become CEO of Tesco’s retail and wholesale operations in the UK and Ireland. The division made up 63 percent of Tesco’s profit in the 2016-17 year.
Wilson’s appointment, although not a surprise, puts the 52-year-old in pole position to eventually take over from Lewis, analysts said.
“(Wilson) brings substantial commercial and retail experience and has an exceptional track record of increasing performance and driving growth in customer-focused businesses,” Lewis said.
Named the 2017 Sunday Times Business Person of the Year, Wilson is credited with pulling Booker back from the brink when he took over the top job at the loss-making company, having previously held roles at Procter & Gamble, Arcadia and Marks & Spencer.
While some shareholders remained sceptical about Tesco’s move to buy Booker, several told Reuters at the time that they welcomed the chance to bring Wilson into the fold.
“Charles Wilson has an excellent track record at Booker and we expect the appointment to be taken positively by the market,” analysts at Bernstein said on Monday.
Tesco’s current UK boss, Matt Davies, will step down at the end of April, when he will have been in the role for 3 years.
Wilson will receive a base salary of 575,000 pounds, an annual bonus of up to 200 percent of salary and an annual performance share plan award of up to 225 percent of salary.
Lewis had a total remuneration package worth 4.15 million pounds in the 2016-17 year.
Shares in Tesco, down 3.4 percent so far this year after the January update disappointed, were down 0.7 percent at 1035 GMT.
Tesco shareholders will vote on the Booker deal at a meeting on Feb. 28 and completion is expected to take place on March 5.
The supermarket group forecast an operating profit before exceptional items of “at least” 1.575 billion pounds for the year to Feb. 24 2018.
That compares to analysts’ current average forecast of 1.564 billion pounds, according to Tesco’s website, and 1.28 billion pounds made in 2016-17.
Tesco said it intended to pay a final dividend of 2.0 pence per share for the year, having announced an interim dividend of 1 pence in October. It had previously guided to a one-third, two-thirds split between the interim and final dividend.
The interim payment was its first since the 2014-15 year when it was mired in crisis.
($1 = 0.7089 pounds)
(This version of the story has been refiled to add byline, clarify paragraph seven)
Additional reporting by Kate Holton; Editing by Keith Weir