Tesco agrees £3.7bn deal to buy Booker

Tesco has agreed a £3.7bn deal to buy wholesaler Booker, which owns the Londis, Budgens and Premier retail brands.

The deal between the UK’s largest retailer and the UK’s largest wholesaler would “create the UK’s leading food business”, according to a joint statement by the two companies.

Many commentators said the deal was likely to come under scrutiny by the competition authorities

In a joint statement the company’s said they expected the merger would help independent retailers, caterers and small businesses by further improving choice, price and service, with enhanced digital and delivery service options.

Charles Wilson, chief executive officer of Booker, said: “I want to be absolutely clear, this is a merger. It’s about maximising the wholesale expertise in Booker and the retail expertise in Tesco. More scale gives better prices and ultimately that helps our retailers to compete.

"But are we going to be turning Booker retailers into mini Tescos? Not a chance.

"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.”

Dave Lewis, chief executive officer of Tesco, 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.”

On completion of the deal, Charles Wilson and Stewart Gilliland, Booker’s chairman, will join the combined group’s board. Charles Wilson will also join the combined group’s executive committee.

Top 50 Indie MFG, which has a supply deal with Booker, welcomed the deal on Twitter saying it was “very positive news”.

Last April it signed a deal with Booker to supply 300 of its stores, and to carry out a major rebranding programme introducing the Londis and Budgens brands on its forecourts.

Responding to the announcement, ACS chief executive James Lowman said:

“The Tesco and Booker merger is a hugely significant deal that demonstrates how important independent convenience stores are to the UK retail market. Ten years ago, pundits were forecasting the demise of independent retailers at the hands of big competitors like Tesco, so the decision by Tesco to invest in supplying those same retailers shows that the independent sector is highly relevant and sustainable.

“Convenience stores are becoming more important to consumers’ daily lives, as they look to shop little and often and to access products and services close to where they live and work. Consolidation in the supply of goods to independent retailers has long been predicted, indeed Booker bought a major wholesale competitor in Musgrave less than two years ago.

“Some retailers will welcome this news, others will be concerned about competing with stores supplied through the merged Booker and Tesco business, and some will be uneasy at the prospect of working in partnership with one of their biggest historical competitors. The Competition and Markets Authority will look at all the implications of this merger, and we will assist them in any way we can.”