What happened

Ken Murphy, the chief executive of Tesco, has received a significant pay rise of £1 million, increasing his total annual remuneration to £10.8 million. This increase comes as Tesco has reported strong company performance, including earnings of £3.15 billion for the year ending February 28. The company’s successful results have also allowed it to award a £65 million bonus to its staff, reflecting a rise in profits by 8.5% to £2.4 billion.

As part of his remuneration package, Murphy will receive an annual bonus of £3.4 million and share awards amounting to £5.7 million for the 2025-26 financial year. This financial success has positioned Tesco to achieve its highest market share in over a decade, now at 28.1%.

Why it matters

Ken Murphy’s recent pay rise to a total remuneration package of £10.8 million reflects Tesco’s strong financial performance, which includes reported earnings of £3.15 billion for the year ending February 28. This rise comes amidst a significant increase in Tesco’s market share, climbing to 28.1%, up from 26.5% in 2020. Additionally, the company awarded a £65 million bonus to staff after profits grew by 8.5% to £2.4 billion, demonstrating the positive impact of the company’s performance on its employees.

However, it’s important to note that Tesco has faced challenges, including a legal setback related to an equal pay claim. Despite these issues, the overall financial results have allowed for increased executive remuneration and staff bonuses, benefiting both Tesco employees and shareholders.

What’s next

1. February 28: Tesco reported earnings of £3.15 billion for the year ending February 28.
2. May 24: Ken Murphy’s basic annual salary will increase by 3% to £1.54 million.
3. 2025: Tesco aims to achieve a 50% reduction in food waste by the completion of the 2025 performance share plan cycle.

Melissa Bethell highlighted that “the remuneration for our executive directors is closely tied to the strong performance of the business.” This reflects Tesco’s focus on achieving its targets, including a market share of 28.1%, which has improved significantly from previous years. The company’s strong financial results have allowed it to implement changes in its bonus scheme, benefiting both executives and staff.

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The deal

German energy firm E.On has agreed to acquire Ovo, creating the UK’s largest energy supplier. The deal is estimated to be worth £600 million and will result in a combined customer base of approximately 9.6 million, surpassing the current market leader, Octopus. This acquisition is part of E.On’s strategy to strengthen its position in the UK energy market, which has experienced increased regulation and competition.

The acquisition is subject to regulatory approval and is expected to be finalized in the second half of 2026. Until the deal is approved, both companies will continue to operate separately, and customers have been assured that there will be no immediate changes to their tariffs during the review process.

In addition to the acquisition, Ovo has also agreed to sell its home services division, which provides boiler servicing and insurance, to Hometree. This move reflects the evolving landscape of the energy market in the United Kingdom.

Financial impact

• Total customers served by the combined E.On and Ovo: 9.6 million
• Estimated value of the acquisition deal: £600 million
• Number of customers E.On currently serves: 5.6 million
• Number of customers Ovo currently serves: 4 million

The acquisition signifies a significant shift in the UK energy market, creating the largest energy supplier in the country. This merger will impact customers of both E.On and Ovo, as well as stakeholders within the energy sector, potentially altering market dynamics moving forward.

Market reaction

Q: What is the expected completion date for the E.On and Ovo acquisition?

A: The acquisition is expected to be finalized in the second half of 2026, pending regulatory approval.

Q: How many customers will the combined E.On and Ovo serve?

A: After the acquisition, the combined entity will serve approximately 9.6 million customers.

Q: What will happen to Ovo’s home services division?

A: Ovo has agreed to sell its home services division, which includes boiler servicing and insurance, to Hometree.

Stephen Fitzpatrick, the founder of Ovo, stated, “Energy retail is now more regulated, more capital intensive and increasingly dependent on long-term investment and scale,” highlighting the evolving landscape of the energy market.

Marc Spieker, Chief Operating Officer Commercial at E.On, emphasized the significance of the UK market, noting, “The United Kingdom is an important growth market for E.On, particularly for flexibility and customer‑focused energy solutions.”

Regulatory and what’s next

As reported, E.On’s acquisition of Ovo is a significant move aimed at strengthening E.On’s position within the UK’s energy market. The deal, valued at approximately £600 million, will create the largest energy supplier in the UK, serving about 9.6 million customers combined. E.On currently has around 5.6 million customers, while Ovo serves 4 million customers.

Both companies will continue to operate separately until the acquisition receives regulatory approval, which is expected to be finalized in the second half of 2026. This review process will ensure that the merger complies with market regulations and does not negatively impact competition.

In addition to the acquisition, Ovo has also agreed to sell its home services division to Hometree, a move that further shapes the strategic landscape of the energy market. The outcome of this acquisition could lead to potential changes in market dynamics, affecting customers of both E.On and Ovo.

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