Booker has “asked” for “lump sum” payments from Makro suppliers - by the end of this week - as a thank-you for rescuing the wholesaler.
At a supplier presentation in May, following the completion of its acquisition, Booker told Makro suppliers it was asking to harmonise terms. But in emails sent to suppliers - seen by The Grocer - its “ask” also included “payments not attached to new business”, with “agreement needed by end of next week to bill in July.”
One supplier who contacted The Grocer said: “We have been asked for a lump sum. Our terms are already harmonised. The justification given is that we would have lost our money with Makro as they would have gone bust. The result will be a period of disruption which will not help the Booker business.”
A leading fmcg sales director added: “We’ve had our conversation. It’s a scale play from Booker. That in isolation makes it reasonably appealing, but it’s presented in the context of a market that’s completely flat.”
The Booker-Makro deal
- 30 May 2012: Booker acquires Makro UK in a cash and shares deal valued at about £140m. Makro owner Metro Group takes a 9.99% stake in Booker
- 14 July 2012: The OFT kicks off an investigation into whether the deal could “lessen competition”. Booker is told to run Makro separately during investigation
- 18 October 2012: Booker lays out its plans for Makro, including Booker concessions and delivery areas
- 8 November 2012: OFT refers merger to the Competition Commission, citing concerns in 13 local areas
- 14 March 2013: CC provisionally clears the deal
- 19 April 2013: CC gives the green light, allowing Booker to merge Makro into its business
Another supplier confirmed: “We have been approached by Makro for cash relating to the deal.”
In a slide from last month’s supplier conference Booker told suppliers that ‘Makro was in trouble’, quoting the Competition Commission’s provisional findings: “The most likely outcome was the business would have been passed to a distress specialist”.
The slide calculates the trade credit risk on Makro’s losses of £60m and 18% decline in sales was up to £160m. And it points out that when recent wholesale casualties such as DBC Foodservice and Waverley TBS collapsed, trade creditors lost 95p in the pound.
A slide with the title ‘Next steps’, shows Booker plans to hold meetings with suppliers “to agree issues/opportunities”, introduce realigned terms effective from 30 June 2013, plans “harmonisation” of payment terms, and wants to drive and broaden the business “ASAP”.
One alcohol supplier, who has not been approached by Booker, said he was surprised by the move. “I have always found them reasonable in their expectations and willing to work with suppliers rather than batter them with a big stick, so this seems quite out of character. But we’re operating in a very difficult environment and everyone’s looking to squeeze more out of everything.”
A Booker spokeswoman said: “We had our supplier conferences in early May and outlined the benefits to suppliers of Booker and Makro coming together. We are really grateful for the supplier support.”
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