So who saw that one coming? Wholesaler Booker (BOK) and Britain's largest supermarket chain, Tesco (TSCO), have announced a £3.7bn megamerger, with the grocer offering Booker shareholders a cash-and-shares offer amounting to 205p a share, roughly a 12 per cent premium to the last recorded closing price before the news. By way of reaction, both share prices have spiked, with Booker's immediately trading at 212p, but falling back later.
But analysts seem unconvinced about what's in it for Booker's shareholders in the long term. They should own around 16 per cent of the enlarged entity, and chief executive Charles Wilson will earn a place on the new board, but Tesco seems to be the real winner here. The recovering supermarket chain claimed it would reap efficiency benefits - around £200m worth annually three years after the deal - thanks to Booker's supply chain and is likely to become more cash-generative, too.