Tesco defends Booker takeover as sales recover

tHE boss of tesco has insisted its £3.7bn merger with wholesaler Booker should go ahead, in the face of fierce opposition.

Chief executive Dave Lewis said he continued to believe in the deal, claiming it would lower prices and increase tesco’s buying power.

His comments came as Britain’s biggest supermarket announced its first annual sales increase for seven years – a rise of 0.9pc – in a sign that a turnaround is working.

Group revenue jumped 3.7pc to £55.9bn and operating profits rose 30pc to £1.3bn.

But overall profits in the year to February 25 fell 39pc to £145m as the retailer booked losses to cover fines and compensation relating to its £326m accounting scandal in 2014.

Lewis, 52, announced the proposed merger earlier this year, promising it would spur growth at the enlarged company. tesco wants to break into the wholesale market that supplies restaurants, to tap into the growing number of people who are eating out rather than cooking at home.

However the deal has met opposition internally, and two leading investors – Schroders and artisan – have called on the company to abandon the merger.

But Lewis yesterday insisted the deal will help tesco make savings of at least £175m a year.

Booker supplies 450,000 caterers – such as Wagamama and Carluccio’s – and tesco has 730 large stores and 2,839 smaller ones, under the tesco Express and One Stop brands.

But the duo will have to get the deal past the competition regulators, who could require tesco to sell its One Stop store chain. Shares fell 5.7pc, or 11.2p, to 184.4p.