Booker buys Budgens and Londis chains for £40M

By Michael Stones contact

- Last updated on GMT

Booker has signed a deal to buy Budgens and Londis for £40M
Booker has signed a deal to buy Budgens and Londis for £40M

Related tags: Retailing, Supermarket

The Booker Group, the UK’s largest cash and carry wholesaler, has agreed to buy Budgens and Londis for £40M.

The firm has signed a purchase agreement with owner the chains Irish food wholesaler Musgrave Group.

Booker chief executive Charles Wilson said the deal would be good for shoppers and the independent retail sector. “Booker, Londis and Budgens are joining forces to help independent retailers prosper throughout Great Britain,”​ he said in a statement.

“This transaction should strengthen Londis, Budgens, Premier, Family Shopper and other Booker retailers, through improving choice, prices and service to consumers. Overall it will help independent retailers prosper.”

Supply chains

The acquisition was expected to improve the efficiency of the business units’ supply chains at a time of turmoil in the UK grocery sector, as the big four supermarkets – Tesco, Asda, Sainsbury and Morrisons battled discount chains Aldi and Lidl.

Symbol retail chain Londis operates 1,630 convenience stores, with sales of £504M in the year to December 2014. 

Budgens is a franchised chain of 167 grocery stores, with sales of £329M last year. 

Musgrave’s business, known as GB Limited, made an operating loss of £7.4M, before exceptional items, on sales of £833M last year.

Booker planned to develop the Budgens and Londis brands alongside its retail brands Premier and Family Shopper. GB Limited's supply chain will be used for delivery to Booker retail customers. 

‘Improve the choice’

Budgens and Londis brands will be retained and their shoppers benefit from an improved local and national supply chain, said Booker. “This will help improve the choice offered by the retailers to the consumer​,” it added.

In Charles Wilson's words:

“The increased scale and operational efficiency should help lower prices, and retailers will benefit from a better delivery and cash and carry service. This will help independents prosper amid the changes that are occurring in the grocery market.”

“The increased scale and operational efficiency should help lower prices, and retailers will benefit from a better delivery and cash and carry service. This will help independents prosper amid the changes that are occurring in the grocery market.”

Booker expected the acquisition to have no impact on earnings in the first year of ownership before contributing to earnings in the second year.

The deal requires the approval of the Competition & Markets Authority but not Booker’s shareholders.

Meanwhile, the cash and carry group announced total sales up by 1.5% at £4.8bn and like-for-like sales, excluding Makro, up by 2.3% in full-year results to March 27. 

Operating profit was 17% up at £140.3M, with profit after tax up by 12% to £117.7M after exceptional items.

“This was a good year,”​ said Wilson. “Customer satisfaction continued to improve, which helped grow group sales to £4.8bn. Our plans to focus, drive and broaden the business remain on track.  We look forward to helping our customers prosper in the years ahead.”

The acquisition at a glance

  • Purchase price: £40M
  • Londis: 1,630 stores, sales of £504M
  • Budgens: 167 stores, sales of £329M   
  • GB Limited: operating loss of £7.4M, sales £833M
  • Booker: 172 wholesale outlets, supplies 129,000 independent retailers

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