Tesco builds food group with £3.7bn Booker deal
The companies said that combining the companies present a “broader market opportunity” for suppliers, with strong growth prospects and a clear opportunity to develop better own brand and fresh ranges
It also expected to cut food waste and increase efficiency by creating a broader, multi-channel partner who can work with producers across their full agricultural crop.
The companies argue that it will create significant opportunities for synergies, meaning cost benefits, and opportunities for innovation.
Booker shareholders will own about 16% of the combined group.
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.”
Charles Wilson, chief executive, of Booker said: “Booker is committed to improving choice, prices and service for the independent retailers, caterers and small businesses that we are proud to serve.
“We believe that joining forces with Tesco offers the potential to bring major benefits to end consumers, our customers, suppliers, colleagues and shareholders.”
Mr Wilson will join the combined group’s board and executive committee and Booker’s chairman will also join the board
Each Booker shareholder will receive 0.861 Tesco shares and 42.6p in cash.
Based on the closing price of 189p per Tesco share on 26 January the Merger represents a value of approximately 205.3p per Booker share, a premium of approximately 12% to the closing price of 183.1p per Booker share on 26 January.