Booker chief says 'market-beating' profits should dispel fears over Tesco tie-up
The boss of Booker has brushed aside criticism of the firm's potential tie-up with Tesco as the wholesaler unveiled "market-beating" profits.
Chief executive Charles Wilson said the group's record annual performance showed it was not fazed by the £3.7 billion deal, despite some Tesco shareholders branding the takeover a "distraction" for the supermarket giant and urging it to scrap the move.
While Mr Wilson said the investor concern was for Tesco bosses to handle, he told the Press Association: "What it shows is that if anyone had worried about distraction on the Booker side, then we have done a good job of maintaining business as usual as these results are market-beating."
Annual pre-tax profits jumped 15% to £174 million to March 24 this year, with convenience store sales at Budgens and Londis more than doubling to £700 million.
Like-for-like sales also lifted by 0.5% over the period, while revenues in the first seven weeks of the current financial year were outstripping last year's performance.
However, it said tighter regulation on cigarette and tobacco and shifting commodity prices were making trading tougher in a "challenging market".
Mr Wilson said it had been "another good year" for the group and looked set to complete the Tesco deal by late this year or early next year.
He said: "Customer satisfaction was strong and sales and profits were the best we have ever achieved."
Tesco said in January that the swoop for Booker would create "the UK's leading food business" and deliver significant cost savings for the combined group.
However, the supermarket chain has faced shareholder pressure to ditch the move, with some investors taking umbrage with the deal price and branding it an unwelcome distraction.
The tie-up is also expected to face scrutiny from the Competition and Markets Authority (CMA), which could force Tesco to offload stores if it deems the deal harms competition.
On the takeover, Mr Wilson added: "This combination should improve choice, quality, prices and service for the UK consumer.
"It should also help the Booker catering, retail and small business customer prosper in a challenging market."
The group said revenues lifted by 6.7% to £5.3 billion for the year to March, with non-tobacco sales up 8.7% and tobacco sales pushing 2.4% higher.
Online sales were also up 10% to £1.1 billion, while its Indian operation was "making progress".
Shares rose in morning trading on the London Stock Exchange, as the company also announced a special dividend of 3.02p per share and a final dividend of 4.97p per share.
Shore Capital analyst Clive Black said: "Charles Wilson, Booker's simply superb CEO, and undoubtedly the brightest feature of the merger from a Tesco perspective, has underscored his excellent career credentials operationally through this set of results."
However, he took aim at the CMA for the time it was taking the competition watchdog to investigate the Tesco-Booker deal.
He added: "We are, however, perplexed, intrigued and bamboozled as to why a consultation on a merger announced in January has not yet commenced. Maybe the CMA was waiting for Booker's full-year 2017 results too.
"Quite how the CMA goes about investigating a merger that is now central to the Booker investment thesis remains to be seen.
"Whilst process laden and driven, the CMA seems from the outside, to us anyhow, to operate in a parallel universe to the real world of a market economy; a little like Jeremy Corbyn on state expenditure, national debt, the motives of business and the subject of can a country go bust.
"Could it seek to waive this deal with Tesco through at first base?"
Booker is the UK's largest cash-and-carry operator and employs 13,000 staff.
In a statement, the CMA said: "We continue to be involved in discussions with the companies.
"This is to ensure that we have all the information we need before we formally open the investigation.
"The time required to do this varies from case to case and clearly this is a large, important and complex merger.
"Once we open the investigation, we will then seek views from all those affected by the merger - and we know there will be a large amount of interest and responses.
"We are rightly expected to investigate this merger thoroughly - and that is exactly what we are doing."