Booker Group to buy Budgens and Londis
Booker Group, Britain's biggest cash-and-carry wholesaler, is to buy local grocery chains Londis and Budgens.
Booker has said that it will pay £40m to Ireland's Musgrave Retail Partners for Londis' 1,630 convenience stores and Budgens' 167 franchise outlets.
Londis and Budgens have struggled to maintain their share of the British grocery market amid a supermarket price war.
They chalked up a combined operating loss of £7.4m in 2014.
"The grocery market in Great Britain is experiencing fundamental and permanent structural change, with intense competition and a deflationary environment," said chief executive Chris Martin of Musgrave Group.
"Given these challenging market dynamics, we carefully evaluated all of the possible options for our [British] business."
Musgrave has owned Londis and Budgens since 2002.
Booker said that access to its supply chain and economies of scale are expected to boost Londis and Budgens' financial performance.
"We anticipate that the acquisition will be earnings neutral in the first complete year of ownership and earnings enhancing thereafter," said Booker.
Completion of the acquisition depends on the approval of the Competition and Markets Authority.
As well as announcing the deal, Booker also reported its full-year results, with pre-tax profits rising 14% to £138.8m.
Shares in Booker jumped on news of its results and the planned acquisition. By mid-morning they were up more than 10% at 167.70p.