Tesco buys Londis and Budgens owner Booker for £3.7bn

By Jo Gilbert

Published: 27 January, 2017

Tesco is set to merge with Britain's biggest food wholesaler Booker in a £3.7bn deal to create "the UK's leading food business".

Tesco, Britain's biggest supermarket group, is to buy Booker, the company behind Londis and Budgens, according to a statement released today from Tesco Plc.

This morning, Tesco CEO Dave Lewis told BBC Radio 4 that despite being quite different businesses, their main focus was both on food.

However, Tesco could significantly boost Booker's limited wine offering which is currently divided into a three-tier wine list structure of basic, intermediate and advanced.

The advanced wine list consists of just nine reds, eight whites, four sparkling, two rose and one fortified option.

Commenting on today's announcement, Lewis made reference to Tesco's recent troubles, which include a damaging accounting scandal and a slump in sales.

He said: "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. 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."

Tesco bounced back from financial woes along with most other multiples over Christmas, after announcing a solid festive trading period, which is expected to raise the supermarket's annual profits.

The group said that the deal, which took over a year to negotiate, will bring "benefits for consumers, independent retailers, caterers, small businesses, suppliers, and colleagues, as well as delivering significant value to shareholders".

It could trigger a probe from anti-competition authorities however, who are likely to raise questions over its impact on the UK's grocery sector.

Tesco currently owns the 850-strong One Stop convenience store chain while Booker acquired the Londis and Budgens chains in 2015, which are operated by franchisees but are supplied by Booker.

Charles Wilson, CEO of Booker said of the merger: "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."

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