Tesco’s £3.7bn takeover of Booker has been given the go-ahead by shareholders at the wholesale giant, signalling the start of a new empire for Tesco CEO Dave Lewis and his soon to be number two, Charles Wilson.
Earlier today, Tesco shareholders voted to accept the retailer’s controversial £3.7bn takeover, with 85% of shareholders in favour of the deal at a meeting in London.
But the deciding vote came at a crunch meeting of Booker shareholders in the capital two hours later – where 83% voted in favour of the merger.
“I’m delighted that the shareholders of both companies have supported the merger.” said Tesco group CEO Dave Lewis.
”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.”
Today’s D-day for the deal capped a momentous past year for Tesco and Booker, with Lewis and Wilson stunning the retail and wholesale world last January when they first announced it.
It has also sparked a huge period of consolidation in the food and drink wholesale industry.
The build-up to today’s votes had been fraught with in-fighting between some influential shareholders of the two companies. This meant Tesco had faced a more nail-biting time than many expected following the CMA’s approval of the deal in December.
Booker investor Sandell Asset Management and advisory firms Institutional Shareholder Services and Glass Lewis were among those who came out to oppose it, arguing the deal did not represent good value for money.
Glass Lewis told Booker investors Tesco’s proposed premium for Booker “clearly lags regional trends”.
Meanwhile Tesco shareholders, including Artisan Partners and Schroders, were among those who expressed opposition.
Artisan wrote to Tesco’s board last week urging the retailer to “walk away from the deal” after expressing its “disbelief” at reports Booker shareholders wanted more of a premium.
It argued Tesco was overpaying, not underpaying, to take control of the Booker empire.
The Competition & Markets Authority formally gave the go-ahead in December for the deal. It said it had no concerns following an in-depth examination of evidence from a large number of wholesalers, suppliers and retail chains, as well as a survey of hundreds of retailers.
The formal decision followed a provisional green light from the deal watchdog in November, despite strong opposition from many wholesale rivals, who fear the combined buying power of Tesco and Booker will destroy competition in the sector.
Tesco and Booker now expect their merger to be completed on Monday 5 March.
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