Tesco faces Booker revolt

TESCO’S planned £3.7bn takeover of wholesale giant Booker has been hit by another setback after shareholders were advised to block the deal.

Advisory firm Institutional Shareholder Services (ISS) said the merger would bring little benefit to Booker’s investors and that it undermined the wholesaler’s value.

It urged Booker shareholders to oppose the deal which will be voted on at Tesco’s general meeting later this month.

‘ The rationale for Booker shareholders to give up control appears less than compelling at the relatively low premium offered,’ it said. The deal needs 75pc approval from Booker shareholders to go ahead.

The report came as shareholder Sandell Asset Management said it would oppose the deal. Tom Sandell, chief executive, said: ‘ISS’s recommendation validates our belief that the Tesco offer does not offer a fair value for Booker’s great assets and management team, and that Booker shareholders should vote against the transaction.

‘If Tesco is unwilling to raise its offer to a fair level, we agree with ISS that Booker shareholders should reject the offer, and that the downside of walking away from the offer is limited.’

Two of Tesco’s largest shareholders, Schroders Investment Management and Artisan Partners, have also said they will vote against the takeover.

Tesco’s takeover of Booker was backed by the Competition and Markets Authority last year, which said it had no concerns that the deal would stifle competition or compromise prices or services for customers.