Wholesale experts have predicted major consolidation in Spar UK amid rumours that AF Blakemore is looking to buy fellow Spar wholesaler Capper & Co.

Capper confirmed this week it had been in talks with another company "for some time" over a merger. MD Robert Upton said the day-to-day business of Capper would continue in its current form.

"The main benefits of a merger would be strengthening the Spar brand in the UK and creating a more powerful enterprise that could compete more effectively in the increasingly challenging convenience market," he said.

AF Blakemore MD Peter Blakemore declined to confirm or deny that his company was mulling the takeover. However, he has said in the past that his business could grow either by acquisitions or organically.

A deal would be good news for Spar, said one industry expert. "Part of the challenge for a federation like that is: who is the supplier really dealing with? There's a tension between what happens at head office and out at the wholesalers. If Spar has fewer voices, that's good news."

A deal could kickstart further consolidation between Spar wholesalers looking to forge a stronger business model, he added.

Spar's six wholesalers were not currently working efficiently together, another insider claimed. "They all want to prove they're top dog when it comes to buying," he said, adding that any mergers between them would only benefit Spar.

Capper ranked 18th in the The Grocer's latest Big 30 wholesalers survey, with turnover up 2.1% to £289m in the year to April 2010. But pre-tax profits fell by nearly a third to £2.1m and with a profit margin of just 0.7%, Capper was the only Spar wholesaler below the industry average of 1.1%.

AF Blakemore's sales grew by 5.1% to £696.6m over the same period. Its latest accounts showed it had £14m cash and was hoping to recoup £55.2m owed by debtors this year. Financial experts said it could easily cover Capper's rumoured £30m price tag.