Woolworths' new chief admits takeover bid is 'a distraction'

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The Independent Online

Woolworths' new chief executive, Steve Johnson, has admitted that an improved take-over offer for its retail division by Iceland's boss could hinder his efforts to turn it around.

Mr Johnson, who took the helm yesterday, said: "These things are always a distraction." But Mr Johnson said his priority was to meet staff and get on with running the business, such as improving its in-store availability.

A consortium led by Malcolm Walker, the chief executive of the frozen food retailer Iceland, and the Icelandic retail investment group Baugur approached Woolworths with an indicative take-offer for its retail division last month, but Woolworths said it was "unacceptable" and rejected it.

It is unclear if Mr Walker will come back with an improved offer, but it is understood that no further meetings are scheduled between Woolworths and the consortium unless a fresh offer is put on the table.

Yesterday, Mr Johnson held two big meetings with head office staff and pledged to meet store staff over the coming weeks. He said a key operational priority was to fix weak on-shelf availability in "most stores". Mr Johnson, the former Focus DIY boss who could make up to £9m at Woolworths over four years, said: "It is not a strong point in terms of availability."

He will provide further details about his plans for Woolworth at its interim results on 17 September. "I think there are nuggets at the heart of the business and an opportunity to turn this around," said Mr Johnson.

However, he said: "I am not pretending that I have all the answers and that it will be easy." Mr Johnson joked that some people "did question my sanity" before he took the role.

Woolworths' biggest shareholder, the Iranian property tycoon Ardeshir Naghshineh, who has a 10.2 per cent stake, has recommended that it should ignore the potential bid, reported The Independent on Sunday. The offer by Mr Walker – who is not interested in its wholesale entertainment division EUK and its publishing joint venture with the BBC 2Entertain – was predicated on Woolworths' parent company retaining the £124m debt and all its pension liabilities.