Tesco to buy UK’s largest wholesaler in £3.7bn deal
Deal which could result in multi-million cost savings, likely to come under close scrutiny from competition authorities
27 January 2017 | 0
Tesco is set to buy Booker, the UK’s largest wholesaler and the group behind the Londis and Budgens in the UK, in a deal worth £3.7bn
The move is likely to be come under careful scrutiny from the UK’s competition authorities. Tesco already owns the One Stop convenience store chain which has some 850 branches. Booker meanwhile acquired the Londis and Budgens chains in 2015; which although operated by franchisees, are supplied by Booker.
Together, Tesco and Booker have said their goal is to create the UK’s leading business in a £195bn market.
The two companies expect synergies from the deal to reach at least £200m a year by the third year after completion, The Guardian reports, with a boost of at least £25m to operating profit and cost savings of at least £175m.
However Booker’s chief executive Charles Wilson ruled out large-scale job losses, noting that the savings would arise from greater efficiency and procurement. He was likewise confident that Booker’s convenience store brand names Londis, Budgens, Premier and Family Shopper would remain.
Commenting on the deal, Alastair Lockhart, insight director at shopper and retail marketing agency, Savvy, told ShelfLife, the deal “makes good sense”.
“Even though Tesco is getting back in its feet, growth in the core UK grocery market is set to be limited over the next few years,” Lockhart said.
“Growth in convenience, on-the-go and food services meanwhile remains buoyant and we see a lot of opportunity for innovation,” he added. “There are many synergies between these complementary businesses and the economies of scale from the deal will help the merged group remain competitive as we enter a period of higher price inflation.”