Some Booker shareholders have threatened to try to derail the £3.7bn merger with Tesco at the 11th hour.
In a letter to the board, Sandell Asset Management, a US-based hedge fund holding the equivalent of 1.75% in the wholesale giant, said it would vote against the proposed £3.7bn takeover, which it said was based on too low an offer.
Tesco’s bid when the deal was agreed in January last year was for a cash-and-shares offer worth 205.3p per share. But Sandell said it believed the fair value for Booker was between 255p and 265p per share.
Sandell said the premium being offered to shareholders was “well below the average” paid to British companies been bought in the last decade - which it said was about 25%.
“In Booker, Tesco is getting a great asset and a great management team on the cheap,” said Sandell founder Thomas Sandell.
“Unless the consideration is increased, we do not believe that shareholders should vote in favour of the deal at the upcoming shareholder meeting.”
Its intervention comes ahead of two crunch votes on 28 February, with both Tesco and Booker shareholders voting on the deal.
Booker needs 75% support from its shareholders, unlike the 50% required by Tesco.
The merger also faces opposition from influential Tesco shareholders Schroders and Artisan Partners, which said last March it was against the deal.
Analysis by Bernstein found support among Tesco and Booker shareholders was “high but not overwhelming”.
Senior analyst Bruno Monteyne said: “We estimate that the deal today would be approved by 70% of votes cast.
“If Schroders and Artisan want to block the deal, it will be hard but not insurmountable. There are sufficient large holders that haven’t disclosed their view that could sway this estimate.”