Why is Tesco buying Booker?

LONDEN - Tesco is to buy wholesaler Booker for £3.7bn, in a deal it claims will create "the UK's leading food business".  The deal has stunned the grocery sector, but was welcomed by investors in both Tesco and Booker, sending their shares higher. What does the tie-up mean and how will affect the shopper on the high street?

Why is Tesco buying Booker?

The deal means Tesco can expand even more quickly in the convenience market, which has been the fastest growing part of the grocery sector for a number of years. The tie-up with Booker would add 5,400 stores to Tesco’s existing network of 2,900 small shops, which operate under the Tesco Express, Metro and One Stop brands.

Booker also has a large food service arm, which supplies high-street chains such as Wagamama as well as pubs, caterers and Rick Stein’s restaurants.

Biggest player in the industry

If the deal goes through, Tesco’s share of the convenience retail market will jump from around 17pc to 28pc, according to Euromonitor. Its share of the total UK grocery market could rise by another 2pc; Tesco is already by far and away the biggest player in the industry. This could form the crux of any investigation by the Competition and Markets Authority, which would be concerned that Tesco has become far too dominant.