Proposal for Booker Group to acquire Metro UK

Released : 30 May 2012 07:00

RNS Number : 3683E
Booker Group PLC
30 May 2012

Booker Group Plc RNS

30 May 2012


Proposal for Booker Group to acquire Metro UK


Booker Group Plc ("Booker"), a leading UK food wholesaler, and Metro Group AG ("Metro"), the German retail and wholesale group, are pleased to announce that they have entered into an agreement for Booker to acquire Makro UK ("Makro UK"), Metro's wholesale business in the UK, in exchange for new Booker Shares, representing 9.99 per cent of the current issued share capital of Booker and a cash consideration of £15.8 million.


Based on the closing price on 29 May 2012, being the last practicable date prior to this announcement, of a Booker share of 79.1p, the value of the New Ordinary shares to be issued is £123.9 million which, combined with the cash sum of £15.8 million, values Makro UK at £139.7 million.


Through this Proposed Transaction Booker is seeking to become the UK's leading wholesaler to caterers, retailers and small and medium sized enterprises, with a wide range of food and non-food via the internet, delivery and cash and carry. The combination of the two businesses will enable Booker and Makro UK to further improve choice, prices and service for all customers. The Proposed Transaction includes Makro UK's network of 30 purpose built sites which serve more than 1m customers, largely small and medium-sized enterprises - a customer base that complements Booker's focus on catering and retail customers.


Booker and Metro have agreed to enter into a strategic partnership agreement which will enable competence sharing for mutual benefit. Metro will become a significant shareholder in Booker, and there is an agreement to enter into a relationship agreement regarding its shareholding.



Charles Wilson, Chief Executive of Booker, said:


"Through working together, 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. The Board is confident that this collaboration will enable us to continue to generate value for shareholders."



Olaf Koch, Chairman of the Management Board of Metro Group, said:


 "In Booker, we have found the right buyer for our challenging UK business, which has shown an unsatisfying performance. Booker is very well positioned in the UK market, with a great brand perception and vast experience in managing product ranges and in customer services. Therefore we are convinced that this new setup meets all requirements for future success in the UK, while allowing Metro Group to further concentrate on countries within our strategic focus."


Next steps:


Makro UK is of sufficient size relative to Booker to constitute a Class 1 transaction under the Listing Rules and the Proposed Transaction is, therefore, conditional upon the approval of Shareholders.


Further details of the Proposed Transaction, together with a notice convening a General Meeting to approve the Transaction, will be contained in a circular due to be sent to shareholders on or around 15 June 2012. The circular will include a recommendation from the Board of Booker that shareholders vote in favour of the transaction. All documentation relating to the Proposed Transaction will be on the Booker Group website: 



For further information contact:


Tulchan Communications (PR Adviser to Booker Group Plc)

020 7353 4200

Susanna Voyle


A teleconference presentation for analysts will be held at 8.30am on Wednesday 30 May. For further details please call Sandra Cameron at Tulchan Communications on 020 7353 4200. The presentation for analysts can be found on the Booker Group website: 


Headline principal terms of the Proposed Transaction:


-      Booker will acquire Makro UK, including 30 purpose built sites;


-     The consideration for the Acquisition comprises the issue by Booker to the Seller of 156,621,525 New Ordinary Shares and the payment by Booker to the Seller of £15,800,000 in cash;


-      Makro UK will be acquired on a "debt free/cash free basis" with normalised working capital.  The amount of the consideration will be adjusted for any debt or cash balances and if the actual working capital balance shown by completion accounts exceeds or falls short of the normalised level of working capital as agreed between the parties


-      Closing is conditional, inter alia, on the approval of the Proposed Transaction by Booker's Shareholders and the approval by the supervisory board of Metro; Booker will notify the acquisition to the Office of Fair Trading; the Proposed Transaction is not conditional on clearance from the competition authorites


-      Booker and Metro have agreed to enter into a strategic partnership agreement to facilitate competence sharing between the two groups


-      Booker and Metro have also agreed to enter into a relationship agreement containing provisions relating to Metro's  shareholding in Booker under which Metro has agreed to not sell any shares, subject to some specific carve-outs, for a minimum of 12 months from the date regulatory clearance for the Proposed Transaction is obtained


The detailed terms of the transaction will be set out in the circular to shareholders.


Together, Booker and Makro UK will be seeking to improve choice, prices and service for customers:


Choice: A typical Booker branch carries 8,500 stock keeping units and a typical Makro UK branch sells 29,000 stock keeping units.  Booker intends to make part of Makro UK's product ranges available throughout the UK, either in its branches or via the internet.


In addition, it is intended that Booker's speciality catering ranges will continue to be supplied by its Ritter subsidiary and on-trade ranges will be supplied by its Classic subsidiary. Together, Makro UK and Booker should offer an improved professional range for caterers, retailers and professional businesses throughout the UK.


Prices: Booker has a range of private label brands that offer good value for money, including: Chef's Larder, Booker Basics, Farm Fresh and Euroshopper which are expected to be made available to Makro UK's customers. It is intended that some of Makro UK's ranges will be made available to Booker customers.


Service: Booker has strong internet capabilities and intends to use these to develop business services for Makro UK's customers throughout the UK. Booker expects to improve the delivery service for customers by utilising Booker's and Makro UK's sites. Through pooling stock, availability for customers should also be improved.


Overall: It is expected that Booker's and Makro UK's customers will benefit from better choice, prices and service via the internet, delivery or cash and carry.


Booker and Makro UK have complementary customer bases


Booker primarily serves caterers and retailers and Makro UK primarily serves small and medium sized enterprises (SMEs).  Together, it is anticipated that Booker and Makro UK will seek to improve choice, prices and service for customers throughout the UK.






Customers (000's)

Sales (£bn)



Makro UK


Makro UK













Other SMEs













Source: Booker and Makro UK

The figures for Booker are for the year to 30 March 2012; the figures for Makro UK are for the year to 31 December 2011; the figures are unaudited



Directors, management and employees of Makro UK


Booker employs more than 10,000 colleagues and Makro UK 3,000 employees.  Booker attaches importance to the skills and experience of the management and employees of Makro UK.

Improving service for suppliers:


Booker and Makro UK will provide a growing route to market for suppliers, with low financial risk. Supply chain efficiency should improve and carbon emissions should be reduced.  The Enlarged Group will be able to sell a wider range of products to SME customers. At a time when multiple retailers are increasingly targeting SME customers, the combination of Makro UK and Booker should provide suppliers with a high service route to market.


Information on Booker, Metro AG and Makro UK:




Booker Group is a leading UK food wholesaler with sales for the year ended 31 March 2012 of £3.9 billion. Booker operates from 172 branches in the UK with a typical branch selling 8,500 stock keeping units. Booker's customer base includes 338,000 caterers, 83,000 independent retailers and 60,000 other customers. Of the £3.9 billion sales, £1.1 billion is delivered to customers' premises (27% of sales), including £635m on the internet (16% of sales) and £2.8 billion is collected by customers from Booker's branches. Since 2005/06 Booker has been focusing, driving and broadening the Group to become the UK's leading supplier to caterers and retailers. Through improving choice, prices and service, Booker has increased customer numbers by 75,000 since 2007/08 and grown sales by £800 million. In recent years Booker has successfully acquired Blueheath, Classic and Ritter to improve customer satisfaction and deliver shareholder value.


Metro AG


Metro AG is the world's fourth largest retailer by revenue. Makro UK is part of the Metro AG Cash & Carry Division which is an international self-service wholesaler with sales of over €30 billion in 2011 and approximately 700 locations across 30 countries.


Makro UK


Makro UK began trading in the UK in May 1971 at Eccles in Manchester. Makro UK includes a network of 30 purpose built sites, which it owns or holds on long leasehold. Makro UK serves a broad customer base. Makro UK has been underperforming in the past few years. For the year ended 31 December 2011 Makro UK had gross assets of £348.7 million and made a loss before taxation of £63.2 million. The trading results for Makro UK for the three years ended 31 December 2011 were as follows:



Year ended 31 December











-     tobacco




-     non tobacco







Reported Loss before tax




Net financing costs




Reported operating loss







Depreciation and amortisation








Pension credits




Other significant items




Operating profit/(loss) before pension credits, depreciation, amortisation and

other significant items




Gross assets






The financial information set out above is unaudited; audited financial information for Makro UK will be published in the circular to be sent to shareholders

On acquisition, Booker will consider the fair value of all assets and liabilities and will align accounting policies



Effects of the Acquisition on Booker Group:


The Board believes that, taking into account Makro UK's historic levels of operating losses and the increased number of shares in issue following Admission, the Proposed Transaction will be earnings dilutive in the year ending 29 March 2013. Assuming the benefits of serving a wider customer base with a wider range of products are achieved, the Proposed Transaction is anticipated to be earnings enhancing in the first full year after integration.  This statement is not meant or intended to be a profit forecast, and should not be interpreted to mean that the earnings per share of Booker following the Acquisition will necessarily be above or below the historical published earnings per share.


Current trading and prospects:




Booker's preliminary results for the year ended 30 March 2012 were announced on 24 May 2012 and contained the following statement in relation to the outlook for the Group:


"The economy is expected to remain challenging in the year ahead and the food wholesale market remains very competitive. Nevertheless, we expect to continue to make progress in this difficult environment. Booker has made a good start to the current financial year, even compared to the very strong performance in the first seven weeks of last year and, in spite of the fact that tobacco sales have been slow, we remain on course to meet our expectations for the year."


There has been no change in the performance or outlook of the Group since 24 May 2012.


Makro UK:


While the trading environment is expected to remain challenging in 2012, Makro UK has ambitious plans to accelerate its business turnaround. Makro UK has had a good start to the current financial year, and year-to-date Makro UK is performing in line with its business plan.

Admission to trading and dealing arrangements:


An application will be made to the UKLA and to the London Stock Exchange for the New Ordinary Shares to be admitted to the Official List and to trading on the London Stock Exchange's main market for listed securities. The New Ordinary Shares, when issued, will rank pari passu with the existing Ordinary Shares in issue at that date.




The Board is of the opinion that the Proposed Transaction is in the best interests of the Company and shareholders as a whole. Accordingly, the Board intends to unanimously recommend that shareholders vote in favour of the Resolution to be proposed at the General Meeting.




The following definitions apply throughout this announcement unless otherwise stated or the context requires otherwise:



The proposed acquisition of Makro UK by Booker;

Acquisition Agreement

the agreement relating to the Acquisition;

Booker or Company

Booker Group Plc, a public company limited by shares incorporated under the laws of England and Wales with company registration number 05145685 and having its registered office at Equity House, Irthlingborough Road, Wellingborough, Northants NN8 1LT;


the board of directors of Booker;

Closing or Completion

the completion of the Acquisition in accordance with the terms of the Acquisition Agreement;


the members of the board of directors of Booker;

Enlarged Group

Booker and its subsidiaries, including Makro UK;

General Meeting

the general meeting of the Company, details of which will be given in the circular;


Booker and its subsidiaries, excluding Makro UK;

London Stock Exchange

London Stock Exchange plc;

Makro UK

Makro UK comprises Makro Self Service Wholesalers Limited, the operating business of Makro UK, two holding companies (Makro Holding Limited and Makro Properties Limited), as well as four properties which are used by Makro Self Service Wholesalers Limited that are held within a separate entity and will be transferred into Makro Properties Limited;


Metro Group AG, a public company limited by shares incorporated under the laws of Germany with company registration number HRB 39473 and having its registered office at Schlueterstrasse 1, 40235 Duesseldorf;

New Ordinary Shares

the 156,621,525 new Ordinary Shares to be issued pursuant to the Acquisition Agreement as part consideration for the Acquisition;

Official List

the official list of the FSA;

Ordinary Shares

ordinary shares of 1 pence each in the capital of the Company;

Proposed Transaction

the transactions contemplated by the Proposed Transaction Documents;

Proposed Transaction Documents

the Acquisition Agreement, the Strategic Partnership Agreement,

the Relationship Agreement, the Transitional Services Agreement,

the Trade Mark Licence and any other documents in the Agreed

Form, further details of which will be given in the circular;


Small and medium sized enterprises.


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