Booker slowdown raises doubts over Tesco deal

Sales growth is slowing at Booker as it edges towards a £3.7 billion takeover by Tesco in the face of opposition from some influential parts of the City.

The cash and carry giant blamed the tobacco display ban and new plain packaging restrictions for a rise in fourth-quarter sales of just 0.5%.

Chief executive Charles Wilson insists the Tesco deal will be a good one and that it is “business as usual” while the competition watchdog investigates its merits.

Non-tobacco sales were up by 4.5% in the 12 weeks to March 24. Over the last 12 months, that leaves Booker with sales of £5.3 billion.

Earlier this week Schroders and Artisan Partners came out strongly against the deal, saying it would be a distraction to Tesco when its own turnaround efforts were just starting to work.

Clive Black at Shore Capital today added his own scepticism on the deal, telling clients “in a nutshell we deem this to be non-transformational for Tesco and possibly a big risk for Booker”.

He thinks investors should dump the stock.

David Alexander at GlobalData said: “With the spotlight firmly trained on its impending merger with Tesco, Booker’s financial year culminated in a damp squib of a Q4 performance as sales growth largely fizzled out.”