Tesco CEO Dave Lewis.REUTERS/Neil Hall
LONDON — Supermarket Tesco on Friday announced a deal to merge with Booker, the UK’s largest wholesale food retailer.
Tesco is valuing Booker at £3.7 billion ($4.6 billion) under the deal, representing 205.3p per share or a 12% premium on Thursday’s closing price.
Northamptonshire-based Booker is the UK’s biggest wholesale food supplier and sells branded and white label goods to over 500,000 customers across the UK, such as convenience Budgens and Londis, catering companies, pubs, and restaurants such as Byron Burger, Wagamama, Carluccios, and Prezzo.
Booker had sales of £5 billion in 2016 and made a pre-tax profit of £150 million.
Tesco says in a statement: “The Combined Group will be well placed to serve the large, established ‘in home’ food market as well as the faster growing ‘out of home’ food market.”
Tesco CEO Dave Lewis says in a statement announcing the deal:
“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.”
Booker CEO Charles Wilson says in a statement:
“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.”
Booker shareholders will get 16% of the newly merged group. Tesco says it reckons it can make £200 million of pre-tax synergies — business speak for cost savings — a year by the end of the third year after the deal completes.
FTSE 250-listed Booker was founded in 1835 by George and Richard Booker. The company founded and used to sponsor the prestigious Booker Prize for literary fiction in 1968. (The prize is now sponsored by fund management firm Man Group.)
JPMorgan Cazenove advised Booker on the deal, while Greenhill, Barclays and Citi all advised Tesco on the deal.
This story is developing. Refresh for the latest.
NOW WATCH: The Property Brothers teach the actual meaning of tricky real estate ‘code words’
Leave a Reply
Leave a Reply
This site uses Akismet to reduce spam. Learn how your comment data is processed.
