Supermarket giant’s takeover of wholesaler could cause competition concerns and led to resignation of independent director. Tesco, Britain’s biggest supermarket group, is to buy Booker, the UK’s largest food wholesaler and the company behind Londis and Budgens, in a £3.7bn deal.
The two companies said they wanted to create the UK’s leading food business in a £195bn market, claiming it would “bring benefits for consumers, independent retailers, caterers, small businesses, suppliers, and colleagues, as well as delivering significant value to shareholders”.
But the deal will raise questions over its impact on the UK’s grocery sector and is likely to be scrutinised closely by competition authorities. Tesco owns the 850-strong One Stop convenience store chain while in 2015 Booker acquired the Londis and Budgens chains, which are operated by franchisees but are supplied by Booker.
Nor was the tie-up completely unanimous among members of the Tesco board. The supermarket group’s chief executive, Dave Lewis, admitted that Richard Cousins, boss of catering group Compass who abruptly quit his position as senior independent director of Tesco earlier this month, was not supportive of the Booker deal, which took a year to negotiate.
Lewis said he respected Cousins’ decision and described their discussions as “good governance” but stressed that the rest of the Tesco board backed the deal.
Tesco shares jumped 10% to 208p on the news, while Booker shares leapt 15% to 211p.