£140m deal for Makro UK will boost Booker
FOOD wholesaler Booker aims to turn around the loss-making cash and carry firm Makro UK after taking it off the hands of German retailer Metro in a £140m deal.
It will hand Metro £15.8m and a 9.99 per cent stake in Booker as the two firms agree to work together on improving their supply chains and offering a greater choice of products.
The deal gives Booker, which has more than 170 branches that supply convenience stores, restaurants, pubs, schools and prisons, the ability to reach hotels and the smaller firms that are the usual customers of Makro.
Charles Wilson, formerly a key lieutenant to Sir Stuart Rose at Marks & Spencer, has been credited with turning around the fortunes of the once heavily indebted Booker after returning to the firm to take the top job in 2005.
He hopes to repeat the trick with Makro, which has 30 British stores offering 29,000 products.
“Booker and Makro UK will improve choice, prices and service for retailers, caterers and SMEs throughout the UK.
“Together we will offer a wide range of foods and non-foods to our professional customers, via the internet, delivery and cash and carry,” Wilson said.
The deal will increase revenue at Booker, which has a 12 to 13 per cent share of the £30bn wholesale market, by around 20 per cent from its current level of £3.9bn.
The firm said the deal would dilute earnings in its year to March 2013 and add to earnings in the first full year following integration.
Last week Booker posted a 27 per cent rise in pre-tax profits to £90.8m in the 53 weeks to 30 March on sales up nine per cent to £3.93bn.
“Makro sales and earnings have declined now for a number of years. Market trends were largely missed and transforming the business model was not as successful as other places in Europe,” Metro chief executive Olaf Koch said.
ADVISERS INVESTEC
JAMES GRACE
INVESTEC
BOOKER brought in Investec, Eversheds and KPMG to advise on due diligence.
The Investec team included James Grace, head of corporate finance, Grant Bergman, an associate and Sam Hart.
Grace began his career at PwC and after working as a corporate recovery specialist joined Investec in 1995.
Geof Allen and Simon Masters were part of the legal team from Eversheds where Masters is a partner and Allen a senior corporate finance lawyer. Masters specialises in corporate finance transactions including IPOs, joint ventures and M&As and recently advised Flybe to acquire Finnish airline Finncomm and BA Connect from British Airways. Allen advises on complex high value and mid-market public and private M&A, public bids and fundraising.
JPMorgan Cazenove and Freshfields advised Metro AG.
Simon Marchant, from Freshfields, is a senior corporate partner based in London but has also spent time in New York and Hong Kong. He has previously advised on the $20bn take-private of De Beers and Vodafone’s $190bn purchase of Mannesmann.
Julia Thomas and Caroline Bjerndahl represented JP Morgan Cazenove. (Anaam Raza)