The chief executive of Hermes Fund Managers has warned Tesco shareholders that its deal to buy wholesale company Booker could put too much pressure on corner shops.
If the £3.5bn deal goes ahead the combined group will have an influence over more than 8,000 convenience stores.
Saker Nusseibeh, chief executive of Hermes, told The Times: “My worry is this puts too much pressure on corner stores. Too much power in the hands of any one supplier is never a good thing. In the long term there could be a backlash against them.”
Hermes is not an investor in Tesco but is a “stewardship consultant”, meaning it provides advice and investment strategies to other funds and asset managers.
It has said that it is going to raise this issue with Tesco before the vote on the deal.
Hermes’ concerns on the deal follow those of Tesco shareholders Schroders and Aristan Partners, which collectively own 9% of the retailer, and have called for Tesco to reconsider the deal stating that it has been pitched at too high a price.
If the deal goes ahead then it will create an enlarged group worth £60bn.
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