Outlook: Booker is left fishing

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The Independent Online
IT SEEMS like only yesterday that Somerfield and Booker announced themselves as each other's new best friend. They were in talks about a luvvy-duvvy, all-share merger that would be just splendid for everyone. Good for consumers, for corner shop customers and for both sets of shareholders. Good for all concerned, in fact, apart from those handed their P45s in the subsequent cost-cutting drive.

What a difference 11 days can make. As the deal came apart at the seams yesterday, the recriminations were loud and bitter. Incredibly, both sides have even reached for their lawyers to stop each side making ill-advised claims about each other. The pair seem to have called in the divorce lawyers before even consummating the marriage.

The guilty party was, by its own admission, Somerfield. A due diligence apparently showed that the risks to its shareholders outweighed the rewards. But there may be more to it than that. The market had certainly become alarmed by the management overload faced by Somerfield in trying to digest Booker just months after swallowing Kwik Save. Looking at the rise in Somerfield's share price yesterday, the market is relieved the deal is not going ahead.

The slump in Booker's share price tells a different story, of course. Booker has gone from three options to two. It must now either hitch its wagon to John von Spreckelsen's Budgens or go it alone, find a new chief executive and continue its restructuring process. On the face of it, the Budgens deal looks even less plausible than the link-up with Somerfield. It would be a reverse takeover of almost 1980s-like proportions.

The other choice - going it alone - doesn't look too appetising either. Booker is struggling to find sufficient buying clout and its corner shop customers are being crucified by the supermarkets. Booker is promising to "fish or cut the bait", as its chief executive puts it, by the time of its results on 10 September. Let's hope he lands a big one.