Another advisory group urges Booker shareholders to reject Tesco deal

A second investor advisory firm has thrown a curveball in the path to Tesco’s £3.7bn takeover of Booker, telling the wholesaler’s shareholders to oppose the deal.

Glass Lewis told clients in a note yesterday afternoon that it advised rejecting the deal, on the grounds that the bid “clearly lags regional trends” and may fall below Booker’s true value.

“Given what appear to be sturdy stand-alone prospects and ample liquidity – overseen, in each case, by a capable management team – we see little cause for Booker investors to support what appears to be a less than compelling control transaction,” advisers said.

This follows similar advice  last week from the Institutional Shareholder Services (ISS), which said Booker shareholders should reject Tesco’s “less than compelling” offer.

Booker shareholders will vote on the takeover next Wednesday (28 February); 75% of the votes cast must support the merger for it to go ahead.

The merger has faced several difficulties, including intense scrutiny from the competition watchdog, which finally cleared the deal in December.

Sandell Asset Management, which owns 1.8% of Booker’s shares, has urged fellow shareholders to vote against the deal, saying that Tesco has “lower returns” and that “the premium of the offer was comparatively low”.

There has also been opposition from inside Tesco, according to reports. Last year the late Richard Cousins, boss of Compass, left the board of the supermarket over the proposed transaction. Major shareholders Schroder’s and Artisan, which between them hold more than 8% of the shares, also said they were opposed.

However, most observers still expect the deal to go through.



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