The grocery wholesaler Booker has snapped up the independent Londis and Budgens store chains for a knockdown £40m.
Londis fascias are above 1,630 convenience stores across the South of England, while the slightly more upmarket Budgens has 167 stores, mainly in London and the South-East. The acquisitions will be a good geographical fit with Booker’s existing convenience store chains, Premier and Family Shopper, which are mostly in Scotland, the North of England and the Midlands.
“By adding Londis and Budgens we can continue to improve our buying power,” Booker’s chief executive Charles Wilson said. “While with greater operating efficiency, such as putting more pallets on each wagon, we can get the business back into profit.”
The deal will also help Booker to compete harder with the supermarket chains, which are increasingly looking to tap into the growing convenience market with small-store formats such as Tesco Express, Sainsbury’s Local and Little Waitrose.
According to the market research firm IGD, the number of convenience stores in the UK rose 1.3 per cent in the year to April, as consumers move to shopping more frequently at local or high street shops, rather than heading to large out-of-town stores.
“We’ve seen for 60 years that the supermarket format was very strong. Now we’re seeing that consumers are voting with their feet,” Mr Wilson told Reuters. “Independent convenience stores are doing a much better job.”
Shares in Booker jumped nearly 12 per cent to 170p, moving them to the top of the FTSE 250, as the group said that the deal would take its total stores count above 4,700.
Last year Londis and Budgens had total sales of £883m and lost £7.4m. That contrasts with the latest figures from Booker, which has reported sales up 1.5 per cent at £4.8bn in the year to March and pre-tax profits up by 12 per cent to £118m.
Mr Wilson said: “While the food and grocery market is clearly highly competitive at the moment, the good news is that the best growth is coming from outside the conventional supermarket sector.
“This deal will help independent retailers prosper and give their customers more and better choice.”
Booker also announced a second return of cash to shareholders through a £62m special dividend, which means it will have given investors back almost all the £124m it raised to buy its rival Makro in 2012.
Booker is buying the two chains from the privately owned Irish food wholesaler Musgrave.Reuse content