Booker/Tesco deal is ‘not a betrayal’ says Charles Wilson

Although the shock £3.7 billion merger between Tesco and Booker will have to be approved by the Competition & Markets Authority, the deal is widely expected to go ahead because it would not create a monopoly situation either in the retail or wholesale sectors of the food trade.

For Tesco it means a venture into hitherto unknown territory while for Booker it creates a close link with the retail multiple trade – the sworn enemy of the C&C/wholesaler’s prime independent customers.

Booker’s chief executive Charles Wilson and chairman Stewart Gilliland will join the Tesco combined business’s board, and Wilson told Cash & Carry Management that he also expects Booker chief operating officer Guy Farrant and finance director Jonathan Prentis to remain within the enlarged group.

Asked what he would say to those customers who regard this move as a betrayal, given that Tesco is a direct competitor to many of them, Wilson said: “It is not a betrayal. We are very lucky that we are privileged to service a huge customer base and we have earned that. Our customers compete with Tesco on the high street, and they have for a long time, but at the moment the challenges are far more than that – other competition coming at them too, like the Co-op, Aldi, Lidl, and they are seeing rates go up, costs of labour going up, pension auto-enrolment and a whole lot of other factors. We are very confident that this enlarged group will be able to help them compete in the years ahead and do a better job for their consumers.

“We think that ultimately they will say this is a very good solution for what they need.”

The amalgamation, resulting in Booker shareholders owning around 16% of the enlarged group, is expected to produce cost synergies of £175 million a year, mainly in procurement and distribution.

Combined sales last year were £53.4 billion (Tesco £48.4 billion, Booker £5 billion).