The takeover deal is currently being reviewed by the Office of Fair Trading (OFT). The wholesaler said executives of some food manufacturers would suffer sleepless nights until the OFT announced whether it would be allowed.
He explained were the takeover to be given the go-ahead, the first action that the two buying teams would carry out would be a comparison of terms.
He told FoodManufacture.co.uk: “The last time a leading wholesaler took over a competitor, when Bestway bought Batleys in 2005, that is precisely what happened.
“Several bosses from big companies were called in for some awkward meetings to explain why they were charging either Bestway or Batleys so much more than the other for the same products.”
Expensive
“It proved quite expensive for several companies. Not only were they expected to bring down their prices to the lowest of the two, but there would be an additional reduction to take into account the extra volume, and there were even reports that retrospective payments were extracted to cover the ‘discepancies’.
This was for a company with a combined takeover of £1.6bn, whereas putting Booker and Makro together would produce a business with nearly three times that size,” said the wholesaler. “There could be some quite substantial ‘discrepancies’, and the increase in volumes would offer sizeable leverage,” he added.
In its trading statement, Booker announced that sales for the 24 weeks to September 14 (excluding Makro) were up 3.1% on a like-for-like basis, with non-tobacco sales up 3.8%.
Challenging
The deal for Makro was completed on July 4, but until the OFT review is completed, Booker was required to keep Makro separate from its business.
In its statement Booker said: “Makro has been struggling for the past few years and its performance in the past 10 weeks has continued to be challenging.”
Analysts gave very positive reports on the trading statement. Nicola Mallard, analyst with Investec, said the non-tobacco sales uplift exceeded Investec’s expectations.
Based on the figures, Investec raised its half-year profit forecast to £48.6M and predicted non-tobacco revenue for the full-year to increase by 3.2%.
Clive Black, analyst with Shore Capital said: “Booker has delivered another very robust trading performance set against the backdrop of a poor UK consumer economy.”
Regarding the Makro takeover, he said: “Such a review is always hard to pre-judge, albeit we would expect the majority, if not all, of the transaction to proceed as planned.”
