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Two Tesco shareholders oppose £3.7bn Booker deal

RBR Staff Writer Published 28 March 2017

Two of Tesco's largest shareholders are opposing the company's £3.7bn merger deal with food wholesale operator, Booker Group.

Global asset management firms Schroders and Artisan Partners, who are the British supermarket chain’s third and fourth largest investors respectively, are asking Tesco to call off the merger deal, as reported by The Telegraph.

Put together, the two shareholders have a combined stake of 9%, equivalent to £1.4bn worth of shares in Tesco.

The two stakeholders are reportedly not happy with the amount of price offered by Tesco to acquire the food retailer.

According to Artisan Global Partners fund manager Daniel O'Keefe, Tesco is repeating an ill-fated strategy of over-expansion which it employed in the 1990s.

Calling the deal to be a worrying sign, O’Keefe was quoted by the publication to have said: “With this deal it is taking its eye off its core UK supermarkets and it will lose its competitive advantage. Retail is an incredibly fragile business and it cannot afford to do that.”

A Tesco spokesperson said: “We always listen closely to the view of our shareholders. We have had a wide series of meetings over the last two months and are pleased with the overall response.

“We have been working on the transaction for over twelve months and believe the strategic and financial rationale is compelling. We are confident that it will enhance our recovery plans for Tesco and deliver substantial benefits to customers and shareholders.”

The merger of Booker Group as per Tesco would strategically build its primary expertise of sourcing, distributing and selling food in the UK market besides allowing it to foray into the faster growing out-of-home food consumption sector.

Tesco has also claimed that a majority of its top 10 shareholders have been increasing their stakes in the company further after the merger announcement in late January.

Image: Tesco’s merger deal with Booker has been opposed by certain shareholders. Photo: courtesy of Tescoplc.com.