Tesco has denied its share buyback programme has anything to do with private equity takeover rumours. 

Following US private equity firm Clayton, Dubilier & Rice winning Morrisons at auction with a bid of £7bn, Tesco and Sainsbury’s have been singled out as next in line for a takeover. 

Tesco said it would purchase £500m of shares, the first tranche of buybacks, from investors by no later than October next year.

CEO Kevin Murphy told reporters that the programme “isn’t defensive by any means.”

“This is part of business as usual,” he said on a media call, following the supermarket’s first-half results yesterday. 

Tesco would not speculate on any activity from a private equity perspective, he added. 

“Industry insiders say Tesco is less attractive than Sainsbury’s because it lacks an extensive property portfolio, however it does offer exciting digital expansion plans, with its online infrastructure superior to its big four competitors,” Ross Hindle, analyst at Third Bridge said.

The CEO said Tesco operations were “holding up incredibly well” despite supply chain challenges including delivery driver shortages.

“We’re maintaining very good availability. My view is we will probably see ongoing bumps in the road to and beyond Christmas,” Murphy added.

About 60 per cent of the turkeys the supermarket sells each year are frozen but the number was likely to be higher this year, after worrying headlines about Christmas.

“We currently have a 10 per cent increase of turkeys and there is noticeably an elevated demand for frozen turkeys,” Murphy said.

He said the company would not be increasing prices and was very committed to giving value to customers.

However, he admitted there had been a “promotional de-escalation” in order to ensure products remained in stock for customers.

The household name raised its profit forecast to up to £2.6bn of profits for the full year, some £700m more than had been previously expected.

Operating profit for the overall business soared over 40 per cent in the first six months of the year, scaling to £1.45bn.

Operating profit in the retail business climbed 16.3 per cent to £1.38bn, up from £1.19bn.