Tesco has announced it will buy UK wholesaler Booker Group for £3.7bn.
The deal will combine Tesco’s 3,500 shops across the UK with 4,500 shops supplied by Booker.
Booker owns the Premier, Londis, Budgens and Family Shopper brands.
It has a further 200 wholesale sites.
In a statement this morning, Tesco said the merger would create the UK’s “leading food group” and was a response to the growth of the eating out market.
Tesco said consumers would benefit from an expanded network of up to 8,000 locations to pick up click and collect orders.
It added: “The combined group will be well positioned to offer a more innovative offer for customers and consumers in a larger and faster-growing market.
“The Tesco board believes that the merger represents a compelling opportunity for shareholders of both Tesco and Booker to benefit from the growth opportunities arising from the merger of the two highly complementary businesses.”
Booker’s shareholders will own about 16% of the company after the merger.
Tesco’s share price rose about 10% in the first hour of trading today, while Booker saw its share price jump by 16% in response to the announcement.
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