The companies claim the move will provide better availability of food and help independent small businesses by further improving choice, price and service, with enhanced digital and delivery service options.
Combined savings of £175m are expected through the merge.
Tesco CEO Dave Lewis said: “We have has made significant progress in turning around our UK retail business.”
Further enhance Tesco’s growth
He added: “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.
“Wherever food is prepared and eaten in home or out of home, we will meet this opportunity with the widest choice and best service available.”
Booker CEO Charles Wilson said: “Booker is committed to improving choice, prices and service for the independent retailers, caterers and small businesses that we are proud to serve.
“We believe that joining forces with Tesco offers the potential to bring major benefits to end consumers, our customers, suppliers, colleagues and shareholders.”
Better availability of food
In October last year, Booker reported sales were up by 13% for the first half its financial year (H1) to £2.5bn.
The group’s like-for-like sales (excluding tobacco) for the H1 increased by 0.1% with operating profit also up 9% to £81.4m.
The merge will result in Booker shareholders owning about 16% of the combined company.