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Tesco and Booker Group to merge in £3.7 billion deal

Staff Writer |
The boards of food retailer Tesco and wholesaler Booker Group announced on Friday that they have reached an agreement on the terms of a recommended share and cash merger to create the UK's leading food business.

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In a joint statement, the boards said the combined group would bring benefits for consumers, independent retailers, caterers, small businesses, suppliers, and colleagues, as well as delivering "significant value" to shareholders.

"The combined group will be well placed to serve the large, established 'in home' food market as well as the faster growing 'out of home' food market," the statement read.

"By bringing together Tesco and Booker's retail and wholesale expertise, supply chain and digital capabilities, the combined group will be able to provide greater choice, quality, price and service in the food market, whilst improving efficiency and reducing food waste.

"The combined group will bring together the capacity and capability to generate new growth and deliver significant revenue and cost synergies."

Under the terms of the merger, each Booker scheme shareholder will receive 0.861 new Tesco shares and 42.6p in cash for each Booker share held.

Based on the Closing Price of 189p per Tesco share on January 26, the terms of the merger represent a value of approximately 205.3p per Booker Share, a value of approximately £3.7bn for Booker's ordinary share capital;, and a premium of approximately 12% to the closing price of 183.1p per Booker Share on January 26.

The merger represents a premium of approximately 15%, based on the volume-weighted average share prices of Booker and Tesco since 12 January, and a premium of approximately 24% based on the three-month volume weighted average share prices of Booker and Tesco.

Booker Shareholders will own approximately 16% of the combined group based on the existing issued ordinary share capital of Tesco and Booker.

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