Booker to buy Makro for £139m

The deal, which will be satisfied by the issue to Metro of 156.6 million new shares (9.99% of issued equity) and £15.8m cash, will bring in over 1 million new customers and almost £800m of revenue for Booker.
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.”
Victoria Geoghegan, analyst at Investec, said: “ This looks an excellent deal for Booker. It has proved it can turn struggling C&C businesses around and with another £800m on the top line, this will produce a stronger business with enhanced growth prospects.

"We will produce more detailed numbers in due course, but remain buyers of this stock and retain our DCF-based target price.
“Makro has been under-performing for some years, but Booker management has proven skills in addressing such trading issues, turning its own revenue trends around in 2006.

"The current loss-making nature of Makro means it will be dilutive in FY13 (Investec estimates c12% dilution at EPS), but management hopes to improve returns sufficiently quickly to ensure that net earnings in FY14 are enhanced. After accounting for the extra shares in issue, we expect our FY14E EPS to be broadly unchanged.”