Retail giant Tesco is to buy Booker, the UK’s largest food wholesaler, in a deal worth £3.7bn.
It will create the UK’s largest food business servicing both the in home and out of home segments – a combined market size of almost £200bn. The move will also see Tesco become the first UK multiple to have major nationwide foodservice chains as their customers.
By joining forces, the combined group is said to be able to provide greater choice, quality, price and service in the food market, whilst improving efficiency and reducing food waste. It is estimated these efficiencies could bring about £200m of cost savings per annum by the end of the third year following the merger.
The deal is subject to the approval of the Competitions and Markets Authority (CMA) as Tesco is already the third largest retailer with more than 3,500 stores nationwide and a 28% share of the grocery market.
With annual sales of £5bn, Booker supplies over 450,000 foodservice businesses, including Wagamama, Byron and Carluccio’s, and owns the Londis and Budgens convenience stores.