27th January 2017
Tesco, the country’s biggest supermarket, has announced a £3.7bn deal to merge with Booker Group, the UK’s biggest food wholesaler. Tesco is to buy the FTSE 250 wholesale, which has more than half a million customers, to “create the UK’s leading food business”.
The addition of Booker, which owns the Londis, Budgens, Premier and Family Shopper brands, will add around £3bn to Tesco’s £15.5bn market worth.
In a statement, the companies said: “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. By bringing together Tesco and Booker’s retail and wholesale expertise, supply chain and digital capabilities, the combined group will be able to provide greater choice, quality, price and service in the food market, whilst improving efficiency and reducing food waste.”
The deal, which is expected to face close scrutiny from the competition watchdog, will bring 4,500 stores supplied by Booker into the Tesco fold, as well as 172 Booker wholesale sites, and 13,000 employees. Tesco employs more than 300,000 people in the UK across 3,500 shops, and also owns the One Stop chain.
The Booker takeover see a return to growth after years of Tesco losing market share in the UK reaching a nadir in 2014 when its reputation was tarnished by an accounting scandal that led to the biggest loss in UK corporate history. Since then, the supermarket has sold off international operations and cut loss-making divisions to focus on its core UK business. Earlier this month it reported that it grew market share in the UK for the first time in five years at the end of 2016.
In trading statement, the grocer said its operating profits for this financial year were likely to come in ahead of City expectations.