Cash and carry group Booker saw its shares leap after revealing plans to acquire smaller rival Makro in a deal worth £140m.
IC TIP:
Buy
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86p
Although the acquisition of the loss-making group will hit Booker's earnings this year, analysts point out that management, led by chief executive Charles Wilson, has a good track record on turnarounds. Moreover, Makro brings a much wider product range, a larger small business customer base, freehold property worth £200m, and a heavyweight strategic investor. The seller, German grocery giant Metro, will be paid new shares worth £124m - 9 per cent of the expanded group - and has committed to remain a long-term shareholder while working with Booker to share know-how.
