Takeover that sparked revolt in the boardroom

As Tesco makes £3.7bn bid for cash & carry giant . . .

A DARING £3.7bn merger between Tesco and wholesale firm Booker sparked a boardroom bust up at Britain’s biggest supermarket.

A split between senior figures at Tesco forced non-executive director Richard Cousins to resign in a shock departure earlier this month. At the time, little explanation was offered. But yesterday it was revealed that Cousins, who is chief executive of food group Compass, was opposed to the merger.

The 57-year-old, one of the leading figures in UK food retail, had been appointed to the Tesco board in the wake of the accountancy scandal in 2014. He was seen as key in helping the grocer restore its reputation and in trimming down the bloated business.

Since he joined, Tesco has sold its Dobbies Garden Centres chain, Giraffe restaurants, a cafe business and various arms in an international empire.

But having discovered that Tesco boss Dave Lewis wanted to spend billions expanding the firm again, Cousins quit the board.

Lewis said: ‘Two businessmen don’t look at the same deal in the same way. Good debate is good governance. We were proposing this way forward for the business and he didn’t see it was something he supported. He felt the best thing to do was resign. We thank him hugely for what he has done.’

In just over a decade at Compass, Cousins has transformed the firm and has overseen an increase in its share price. He was even tipped by some for the chairman role at Tesco after Richard Broadbent left in 2014.

Yesterday Cousins told the Financial Times he had been ‘very much against the deal and felt I should resign’, adding: ‘Tesco is in the middle of a price war that could last for years. They need to make the business simpler, not more complex.’

Once Cousins left, Lewis, 51, and Booker boss Charles Wilson, 50, had unanimous support in their boardrooms for the merger.

The deal will create a food distribution giant responsible for £53.2bn in annual sales. Booker supplies 450,000 caterers – including Wagamama, Carluccio’s, Byron Burger, Revolution and Loch Fyne. It also owns the franchise to brands including Premier, Budgens, Londis and Family Shopper.

Tesco has 730 large stores and 2,839 smaller ones, under the Tesco Express and One Stop brands. It is the first major expansion under father-of-two Lewis, who was paid £4.6m last year.

Wilson meanwhile, a former righthand man of Sir Stuart Rose when he ran Marks & Spencer, is already tipped as the next Tesco chief executive after Lewis leaves. The firms claim the merger gives them more buying power enabling them to get better prices for customers. They will be able to buy more from farmers, use the same network of delivery trucks and make savings of £175m a year.

But it has raised concerns from critics who say convenience stores will effectively be buying goods from their competition. Along with Londis and its other brands, Booker delivers to Tesco’s rivals.

Gary Hobbs, analyst at Investec Wealth & Investment, said: ‘Having so much of the convenience store market in the hands of a single player is bound to raise issues.’ John Ibbotson, of retail consultants Retail Vision, said: ‘Its competitors will be deeply concerned by Tesco’s increased buying power, with its dominance stretching further throughout the British food industry. This news will give suppliers and manufacturers real cause for concern.’

The offer values Booker at £3.7bn, giving 205.3p per share. Booker shareholders will own 16pc of the combined company. Booker boss Wilson will join the combined group’s board and executive committee.

On the news, Tesco shares rose 9.3pc, or 17.55p to 206.55p. Booker jumped 16pc, or 29.2p to 212.3p.