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| Tesco to buy Budgens and Londis owner Booker in £3.7bn deal | Tesco to buy Budgens and Londis owner Booker in £3.7bn deal |
| (35 minutes later) | |
| Tesco, Britain’s biggest supermarket group, is to buy Booker, the UK’s largest food wholesaler and the owner of Londis and Budgens, in a £3.7bn deal. | Tesco, Britain’s biggest supermarket group, is to buy Booker, the UK’s largest food wholesaler and the owner of Londis and Budgens, in a £3.7bn deal. |
| The supermarket giant has unveiled an agreed share and cash merger that values Booker at £3.7bn, “to create the UK’s leading food business”. The two companies claimed that the combined group will “bring benefits for consumers, independent retailers, caterers, small businesses, suppliers, and colleagues, as well as delivering significant value to shareholders”. | The supermarket giant has unveiled an agreed share and cash merger that values Booker at £3.7bn, “to create the UK’s leading food business”. The two companies claimed that the combined group will “bring benefits for consumers, independent retailers, caterers, small businesses, suppliers, and colleagues, as well as delivering significant value to shareholders”. |
| Tesco chief executive Dave Lewis said: “Tesco has made significant progress in turning around our UK retail business. This merger with Booker will further enhance Tesco’s growth prospects by creating the UK’s leading food business with combined expertise in retail, wholesale, supply chain and digital. Wherever food is prepared and eaten – ‘in home’ or ‘out of home’ – we will meet this opportunity with the widest choice and best service available.” | Tesco chief executive Dave Lewis said: “Tesco has made significant progress in turning around our UK retail business. This merger with Booker will further enhance Tesco’s growth prospects by creating the UK’s leading food business with combined expertise in retail, wholesale, supply chain and digital. Wherever food is prepared and eaten – ‘in home’ or ‘out of home’ – we will meet this opportunity with the widest choice and best service available.” |
| Under the terms of the deal, each Booker shareholder will receive 0.861 Tesco shares and 42.6p in cash. | Under the terms of the deal, each Booker shareholder will receive 0.861 Tesco shares and 42.6p in cash. |
| Booker shareholders will own 16% of the combined business. | Booker shareholders will own 16% of the combined business. |
| The deal has been unanimously recommended by both boards, but needs approval from regulators and both sets of shareholders. Booker’s chief executive Charles Wilson and its chairman Stewart Gilliland will join the combined group’s board. | The deal has been unanimously recommended by both boards, but needs approval from regulators and both sets of shareholders. Booker’s chief executive Charles Wilson and its chairman Stewart Gilliland will join the combined group’s board. |
| Analysts believe the deal could run into competition problems. Retail specialist Nick Bubb said: “Our instant reaction is that the Competition and Markets Authority will have a field day with this, as although Tesco is mainly a retailer in the UK and Booker a wholesaler, Tesco does own the One Stop convenience store chain that competes with Booker’s interest in symbol groups and convenience store retailing (via Premier and Londis etc), so it is by no means clear that the CMA will allow things to proceed very far without having a good look at the overlap.” | |
| Booker owns thousands of convenience stores under the Londis, Budgens, Premier and Family Shopper brands, and supplies food to 450,000 caterers, 120,000 retailers and 700,000 small businesses including Wagamama, Rick Stein and Carluccios. | |
| Tesco expects synergies from the deal to reach at least £200m a year by the third year after completion , with a boost of at least £25m to operating profit and cost savings of at least £175m. | Tesco expects synergies from the deal to reach at least £200m a year by the third year after completion , with a boost of at least £25m to operating profit and cost savings of at least £175m. |