The UK's largest supermarket group, Tesco has agreed to buy UK’s largest food wholesaler, Booker Group, in a £3.7bn deal.
The firms said the deal would create the 'UK's leading food business'.They added that combining the companies would bring benefits for 'consumers, independent retailers, caterers, small businesses, suppliers, and colleagues'.
Under the terms of the deal, Booker shareholders will end up owning about 16% of the combined group.
'Tesco has made significant progress in turning around our UK retail business,' said Tesco chief executive Dave Lewis.
'This merger with Booker will further enhance Tesco's growth prospects by creating the UK's leading food business with combined expertise in retail, wholesale, supply chain and digital.'
A stock market statement said: 'The combined group will bring benefits for consumers, independent retailers, caterers, small businesses, suppliers, and colleagues, as well as delivering significant value to shareholders.
'The combined group will be well placed to serve the large, established ‘in home’ food market as well as the faster growing ‘out of home’ food market.
'By bringing together Tesco and Booker’s retail and wholesale expertise, supply chain and digital capabilities, the combined group will be able to provide greater choice, quality, price and service in the food market, whilst improving efficiency and reducing food waste.
The combined group will bring together the capacity and capability to generate new growth and deliver significant revenue and cost synergies.'