Tesco's £3.7 billion takeover of wholesale group Booker has been given the green light by shareholders – over one year since the deal was first announced.
The majority of shareholders in Tesco, the UK's largest grocer, voted to back the merger this morning, with 85.22% of shareholders in favour of the move.
Later in the day, Booker's shareholders also voted, with 83% in approval.
Supermarket giant Tesco required 50% support for the deal to go ahead, while its target, Booker, needed 75%.
The transaction is now expected to be completed on 5 March, with Booker chief executive Charles Wilson set to become head of Tesco's UK and Ireland business.
Commenting on the announcement, analyst Clive Black of Shore Capital Stockbrokers, said, “Despite some opportunistic noise from one or two parties with a somewhat distorted view of the deal, the merger comfortably passed through the necessary approval thresholds.
"It would have been hugely surprising to us, and no doubt Messrs Lewis and Wilson ('Chas & Dave'), if the deal had been rejected by shareholders.”
'New Opportunities'
Speaking after the shareholder vote, Dave Lewis, group chief executive of Tesco, said, “I’m delighted that the shareholders of both companies have supported the merger. This merger is about growth, bringing together our complementary retail and wholesale skills to create the UK’s leading food business.
"This opens up new opportunities to provide food wherever it is prepared or eaten – in home or out of home – and will benefit our customers, suppliers, colleagues and shareholders,” Lewis added.
Takeover Talks
The major retail merger was first announced in January 2017, with the aim of creating “the UK's leading food business”, but only received final approval from the UK's Competition and Markets Authority in December.
The deal was brought into doubt in recent weeks, after Booker shareholders were advised by a leading advisory firm to vote against the merger, claiming that it would have "limited potential benefit" for Booker investors and was skewed towards Tesco shareholders.
US hedge fund Sandell Asset Management, which holds a 1.75% stake in Booker, also expressed concerns with the bid being offered by Tesco.
In response, Artisan Partners, one of the biggest shareholders in Tesco, published a letter that it wrote to the supermarket's board, urging it not to increase its offer for the wholesaler.
Instead, the group argued that Tesco should walk away if the deal did not receive the required approval from Booker shareholders.
Now, however, it looks as though the two retail companies have crossed the final hurdle.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.
