The two companies said they wanted to create the UK’s leading food business in a GBP 195 billion market, claiming that it would “bring benefits for consumers, independent retailers, caterers, small businesses, suppliers, and colleagues, as well as delivering significant value to shareholders”, The Guardian reports.
Tesco shares jumped 10% on the news, while Booker shares leapt 15%, the source cites. Tesco and Booker expect synergies from the deal to reach at least GBP 200 million a year by the third year after completion, with a boost of at least GBP 25 million to operating profit and cost savings of at least GBP 175 million.
Under the terms of the deal, each Booker shareholder will receive 0.861 Tesco shares and 42.6p in cash, worth 205.3p a share. Booker shareholders will own 16% of the combined business. The deal has been recommended by both boards, but needs approval from regulators and both sets of shareholders.
Booker supplies food to 450,000 caterers, 120,000 retailers and 700,000 small businesses including Wagamama, Rick Stein and Carluccio’s.
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