Elite shareholders deny Booker takeover deal worth £3.7bn

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Tesco’s proposed takeover of Booker was shut down by two of its elite shareholders that hold roughly 9% of the retailer’s stock.
28 Mar 2017 – Independent

Schroders on Monday wrote to Tesco chairman, John Allan, urging him to withdraw from the merger.

In the letter, seen by the Independent and signed by fund manager Nick Kirrage and global head of stewardship Jessica Ground, the UK-based asset manager said that “the high price being paid for Booker makes the destruction of value even more likely [compare to an average deal].”

The letter said that Schroders would be encouraging other shareholders who voice this view to share it.

“Thus we urge you to reconsider and withdraw the offer,” it said.

Separately, the Financial Times reported that Daniel O’Keefe, who manages a fund at Artisan Partners, described Tesco as a “train wreck” that has over the last decade “expanded into new businesses [and] new geographies”.

“The company basically imploded before [CEO] Dave Lewis began a journey of simplifying, refocusing on the UK. We just don’t understand, in a business as fragile as retail, why on earth would we risk distracting ourselves from that huge goal,” Mr O’Keefe reportedly added.

Artisan Partners was not immediately available to comment when contacted by the Independent.

Both Schroders and Artisan Partners hold around 4.5 per cent of Tesco, according to Thomson Reuters data.

In January, Tesco, which is Britain’s biggest retailer, announced that it was merging with Booker, the UK’s top food wholesaler, in a £3.7bn deal.

In a joint statement, the two companies said that the combined group would bring benefits for consumers, independent retailers, caterers, small businesses, suppliers, and colleagues, and deliver “significant value to shareholders”.

 

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