David Rees: Editor's comment

All posts from: February 2018

Final hurdle

Posted by: David Rees Tue, 6 Feb 2018

Having passed the scrutiny of the UK competition authorities, the final necessary stage of the Tesco-Booker merger is the approval of both sets of shareholders, and the vote is expected to take place at the end of the month.

Tesco has a large number of shareholders, but a relatively small number of investors control most of the issued capital, and it is within this group that the outcome will be decided. So the vote will hinge on whether the deal is seen as a good one for Tesco, not on whether it has a beneficial effect on the convenience sector as a whole, but it is this latter topic that concerns all of us.

For retailers supplied by one of the Booker brands, the merger cannot come soon enough, and they will be hoping to see the benefits work through in terms of cost prices, product quality and availability within weeks of the deal being completed. And they will no doubt be hugely reassured by the news that Booker ceo Charles Wilson will be staying with the group in an enhanced role on the Tesco board after the merger.

Ultimately, the main requirement that a retailer has for their wholesale supplier is for it to be strong and stable, and to have the confidence of big brand suppliers. If it is not, then bad things happen in terms of availability and cash flow, as we have seen in dramatic terms recently. If the merger goes ahead then that would be one positive for retail customers, but hopefully there will be many more to follow quickly afterwards.

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