Tesco’s CEO Is Ready for His Close-Up

Has Dave Lewis's moment finally come?

Unilever NV has begun the process of identifying a successor to Chief Executive Officer Paul Polman.

Lewis, CEO of Tesco since 2014, spent his entire preceding career at Unilever, and has long been seen as a candidate to replace Polman. 

Assuming he wants the job, from one perspective, the timing could not be worse for Lewis. He is trying to convince shareholders to back Tesco's 3.7 billion pound ($4.9 billion) takeover of Booker. Some of the group's investors are unhappy with the deal, while there's a risk that Booker shareholders push for a higher price.

But look at it another way, and the moment couldn't be more perfect.

Lewis is quick to point out the surgery he has performed at Tesco, taking the group from intensive care in the wake of its profit overstatement three years ago to pretty decent health.

If he succeeds in adding Booker — and the chances are now high given that competition authorities recently approved the deal with no penalties and a rebellion among Tesco shareholders failed to gain traction — he could feasibly argue that his turnaround is complete.

So Lewis is in a prime position to hand over the reins to Charles Wilson, the highly regarded CEO of Booker who is joining the Tesco board in an as-yet-unidentified senior capacity. Wilson is more than capable of integrating Booker, grinding out synergies and taking the combined business to its next phase of development.

But Lewis should be far from the only name in the frame. To start with, Unilever has a clutch of internal executives who could succeed Polman.

These include finance director Graeme Pitkethly and Alan Jope, who leads the personal care division. Others who should be in the race are Nitin Paranjpe, the head of home care who becomes president of foods and refreshment in January, Kees Kruythoff, who leads the North American business and becomes president of home care in January, and Amanda Sourry, head of food who moves to run North America in January.

External candidates could include Wan Ling Martello, who leads Nestle SA's Asian business.

According to analysts at Bernstein, Laurent Freixe, head of Nestle's Americas business, Stefan Heidenreich, CEO of Beiersdorf AG, Antoine de Saint-Affrique, chief executive of Barry Callebaut AG and even Kasper Rorsted, head of of Adidas AG, could also be possible candidates.

Given that Unilever has enjoyed a re-rating since it saw off a $143 billion takeover approach from Kraft Heinz Co. earlier thi

s year — thanks to plans to buy back shares, ramp up cost saving and lift margins — internal candidates probably have a following wind.

And that's where Lewis has the advantage. On the one hand, he could easily be portrayed as being from inside the Unilever camp, given his long history with the company. Equally, if the board does decide that an external perspective is needed, his stint at Tesco fits the bill. 

The danger is that in the three years since Lewis left Unilever, some of the gloss may have come off of his accomplishments there. He was known as "Drastic Dave" for his fierce cost-cutting — while this was what the company needed, it must not have won him any friends.

He has been just as aggressive in his deal with Booker. If that comes to fruition it might just pay off — and not just for Tesco.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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