Tesco is to buy the UK’s largest food wholesale operator, Booker Group PLC, in a deal set to create “Britain’s leading food business”.
The acquisition is a marked change of direction for the UK’s biggest supermarket group which has been closing stores around the country in a bid to cut costs. However today’s (January 27) announcement shows Tesco has “made significant progress in turning around our UK retail business,” according to CEO Dave Lewis.
Booker shareholders will end up owning around 16% of the combined group under the terms of the deal.
In a statement, the companies said the merger is expected to enhance quality food at attractive price across retail and eating out locations and better serve the fast growing “out-of-home” food market, as well as help independent retailers, caters and small businesses by improving choice, price, service with enhanced digital and delivery service options.
In addition the combined group could present a broader market opportunity for suppliers “with strong growth prospects and a clear opportunity to develop better own brand and fresh ranges; cut food waste and increase efficiency by creating a broader, multi-channel partner who can work with producers across their full agricultural crop.”
“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,”says CEO Dave Lewis.
“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, adds: “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.”
In May 2015, Booker Group reached an agreement with Musgrave Group to buy the Budgens and Londis grocery chains, for £40 million.