Tesco has announced that it is acquiring food wholesale company, Booker Group, in a deal worth £3.7bn.

Booker’s brands include Londis, Premier, Budgens and Manchester-based Makro.

In an announcement to the Stock Exchange this morning, they said it would create the “UK’s leading food business”.

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“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,” read the statement.

Described as a merger, but Tesco is by far the largest partner, with Booker shareholders owning around 16% of the combined business.

“Tesco has made significant progress in turning around our UK retail business. 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,” stated Dave Lewis, chief executive officer of Tesco.

The Group believes that it will be able to offer its independent retailers, caterers and small businesses enhanced digital and delivery service options; and create more “innovation opportunities.”

“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,” added Charles Wilson, chief executive officer of Booker.

The other “Big 4” supermarkets are likely to be looking in detail at the merger, particularly given Booker’s ownership of high street brands Londis and Budgens