SUPERMARKET giant Tesco has bought the UKs biggest food wholesaler in a3.7billion deal that will create the countrys leading food business.
Booker Group, which owns the Londis and Budgens brands, is the largest cash and carry operator in the UK,supplying foodto 700,000 convenience stores, grocers, pubs and restaurants.
With Tescos new access to this huge market, local convenience stores, cafes and restaurants could start to sell Tesco products.
The move comes after years of falling sales for Tesco, which has lost significant market share to other UK supermarkets, including discount chains Aldi and Lidl.
Tesco chief executive Dave Lewis said: Tesco has made significant progress in turning around our UK retail business.
This merger with Booker will further enhance Tescos growth prospects by creating the UKs 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.
Tescos takeover of Booker shows that the supermarket isexpanding beyond food retailand exploring therestaurant and takeaway food sectors.
John Ibbotson of Retail Vision said: The Tesco of old is back.This is an extremely bold move and demonstrates an intent and sense of purpose that have been missing for the best part of a decade.
Shares in Tesco traded up 7.7 per cent at 203.6 pence Friday morning, and Booker had risen 12 per cent to 205 pence.
Under the terms of the deal, Booker shareholders will end up owning about 16 per cent of the combined group.
Analysts say the deal could face hurdles from the competition regulator.
Our instant reaction is that the Competition and Markets Authority will have a field day with this, said independent retail analyst Nick Bubb.
But Tescos Dave Lewis told BBC radio this morning that he disagreed.
He said: This is not a case of Tesco buying any more stores. We actually dont see there to be an issue in terms of competition.
Booker chief executive Charles Wilson agreed, saying: We think it is pro competition; the CMA will go through what it does, but weve had good advice on this.
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