Booker has announced that has agreed a deal with Germany’s Metro Group to acquire its Makro UK wholesale division for cash and shares worth £139.7m. The two groups also revealed that they will enter into a strategic partnership agreement.
Through the proposed transaction, Booker said that is seeking to become the UK's leading wholesaler to caterers, retailers and small and medium sized enterprises, adding that the combination of the two businesses will enable Booker and Makro UK to further improve choice, prices and service for all customers. The deal includes Makro UK's network of 30 outlets which serve more than 1m customers, largely small and medium-sized enterprises.
As part of the deal, Booker and Metro said that they have agreed to enter into a strategic partnership agreement which will enable competence sharing for mutual benefit. The deal will see Metro becoming a significant shareholder in Booker with the German retail giant receiving 9.99% of Booker's current issued share capital worth £123.9m plus £15.8m in cash for the sale of Makro UK.
Charles Wilson, Chief Executive of Booker, commented: "Through working together, Booker and Makro UK will improve choice, prices and service for retailers, caterers and SMEs throughout the UK. Together we will offer a wide range of foods and non-foods to our professional customers, via the internet, delivery and cash and carry. The Board is confident that this collaboration will enable us to continue to generate value for shareholders."
Olaf Koch, Chairman of the Management Board of Metro Group, added: "In Booker, we have found the right buyer for our challenging UK business, which has shown an unsatisfying performance. Booker is very well positioned in the UK market, with a great brand perception and vast experience in managing product ranges and in customer services. Therefore we are convinced that this new setup meets all requirements for future success in the UK, while allowing Metro Group to further concentrate on countries within our strategic focus."
Makro UK, which generated sales of about £800m in 2011, has struggled in recent years posting heavy losses amid fierce competition in the wholesale sector. It has recently been focused on restructuring the business and boosting its management team.
The deal, which needs shareholder approval, marks another step in the turnaround of Booker under former M&S director Wilson. Since taking over the company in 2005, he has returned it to profit and overseen the acquisition of smaller wholesalers Blueheath, Ritter Courivaud and Classic Drinks, as well as expansion into India. In its most recent
year end results Booker posted a 27% rise in pre-tax profit on total sales up 9.3% to £3.93bn from its 172 depots and online operations.
Shares in Booker jumped 8% this morning to 86p. Nicola Mallard, an analyst at Investec, said: "This looks like an excellent deal for Booker. It has proved it can turn struggling cash and carry businesses around and with another £800m on the top line, this will produce a stronger business with enhanced growth prospects."
NamNews - Wednesday 30th May 2012