Tesco shares boosted by strong results from Booker Group

Tesco (LON:TSCO) shares jumped nearly 5 percent on Wednesday after strong results from wholesaler Booker Group (LON:BOK), who Tesco are in the process of acquiring.

Booker Group reported a total sales rise of four per cent in the first quarter, with like-for-likes up 4.2 per cent. The figures we brought down by an 8.2 per cent fall in tobacco sales, with non-tobacco sales up 9.4 percent.  Non-tobacco sales rose 9.4 per cent, and like-for-likes were up 9.6 per cent.

Booker’s chief executive Charles Wilson called it a “good quarter” for the group, commenting on the planned acquisition by supermarket giant Tesco:

“Our plans to focus, drive and broaden the group are on track. On 27 January we announced the planned merger with Tesco and we are going through the competition process. Meanwhile business as usual is going well as we continue to improve choice, prices and service for our retail, catering and small business customers.”

Booker Group, who own the Londis and Budgens convenience store chains said its balance sheet remains strong, and added that it plans to seek shareholder approval to pay a special dividend of 3.02p per share.

The acquisition by Tesco was announced at the beginning of the year but has since hit the rocks after competition concerns. Tesco is the largest supermarket chain in the UK and Booker Group is the largest wholesaler, prompting concerns that a merger between the two would give Tesco too large a hold on the country’s food supply.

The deal is currently under review by the Competition and Markets Authority (CMA), with Tesco requesting last week that the investigation be fast-tracked.

The deal was initially due to be completed by July 25 but the probe has elongated the process, prompting calls from Tesco for it to “allow it to move more quickly to examining the merger”.

Tesco shares are currently up 4.37 percent at 174.40, with Booker shares up 3.85 percent at 191.30 (1316GMT).