Booker shareholders advised to vote against Tesco takeover

Tesco’s £3.7bn takeover of Booker has been dealt a blow after shareholders in the wholesaler were advised to vote against the deal.

Advisory firm Institutional Shareholder Services believes that Booker investors will have “limited potential benefit” from the tie-up, adding that the transaction “does not warrant support at the current terms”.

“Although the combination is expected to result in substantial synergies, it appears that Booker shareholders will have limited potential benefit from those synergies.

“In addition, the rationale for Booker shareholders to give up control appears less than compelling at the relatively low premium offered,” ISS said in a note.

The group is advising Booker investors to vote against the deal.

The comments come after Sandell Asset Management, which holds a 1.75pc in Booker, also came out against the deal on the current terms, pressing for a higher offer from the supermarket giant.

Sandell said that, as part of the deal, Booker should pay out all of its 2018 profits as a closing dividend to shareholders, as opposed to 65pc.

The group has also claimed that Booker is worth between 255p and 265p a share, much more than the 205.3p offered by Tesco.

Booker shares were trading at 224p on Thursday, up 1.5pc.

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