Tesco Target Booker Has Roots in British Empire, Sugar Shipping

  • Grocery wholesaler founded literary prize known as Man Booker
  • Icelandic investors owned U.K. company from 2000 to 2008

Tesco Plc, the U.K.’s biggest supermarket operator, is buying Booker Group Plc for about 3.7 billion pounds ($4.6 billion) in its largest ever deal. But even in Britain, few have heard of the business it is buying -- the country’s leading supplier to restaurants, pubs and grocers.

Founded in 1835, the Wellingborough, England-based company began by shipping goods, most notably sugar, just as the British empire was expanding across the world. As the U.K.’s star faded, so did Booker’s focus on shipping. It decided to concentrate instead on the wholesale food market, under the name Booker, McConnell Ltd. In 1968, it sponsored a literary prize for works of fiction, which came to be known as the Man Booker.

Ownership of Booker passed to foreign investors. In 2000, the company was acquired by Iceland Supermarkets’ Big Food Group, which in turn was bought by Reykjavik, Iceland-based Baugur Group Hf in 2005. The company split the two and re-floated Booker on the London stock market in 2007, before selling it in 2008. Metro AG, Germany’s biggest retailer, also acquired a stake in 2012 before selling it for 212 million pounds in 2014 as it sought to unlock value from its retail holdings.

Charles Wilson, a former top aide to Stuart Rose at Marks & Spencer Group Plc, is the company’s chief executive officer and will join the Tesco board. After almost a decade working alongside Rose, the former management consultant surprised retail analysts in 2005 by quitting M&S to run Booker. During his tenure, Wilson has doubled sales and profits, built an online distribution business and overseen a soaring stock price. Booker shares have returned an average of 28 percent annually since return in the stock.

Besides wholesaling, the Booker group owns retail brands Premier, Family Shopper, Budgens and Londis; supermarkets and convenience stores under those names are operated by independent grocers. Booker also supplies food to the country’s cinema sector and jails and owns Makro, a “cash and carry” operator that sells drinks and cleaning, office and food-service supplies.

Tesco is expanding its convenience-store business as German rivals Aldi and Lidl eat into the grocer’s market share through low-budget offerings. Buying Booker allows Tesco to capture about 30 percent of the convenience market. It could also streamline Tesco’s supply chain.

“The deal will give Tesco more bargaining power with suppliers and a huge slice of the retail convenience market,” Bryan Roberts, an analyst at TCC Global, said by phone. “It’s a game-changing deal that’s completely from left field.”

— With assistance by Sam Chambers

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE