Shares in Tesco (LON:TSCO) have advanced in today’s trading, holding steady as investors in bot Britain’s biggest grocer and Booker Group (LON:BOK) prepare to vote on the tie-up between the two companies. The vote will come amid growing opposition, with both Institutional Shareholder Services and Glass Lewis having advised investors in the wholesaler to reject the deal.
As of 13:07 GMT, Tesco’s share price had added 0.29 percent to 206.60p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.04 percent higher at 7,292.46 points. Booker’s share price meanwhile is 0.18 percent up at 224.00p, as compared with a 0.21-percent gain in the mid-cap FTSE 250 index.
Tie-up to face investor opposition
Investors in both Tesco and Booker are scheduled to vote on the tie-up deal between the two companies tomorrow, with the deal facing opposition from Sandell Asset Management, which holds a stake in the wholesaler.
“The threshold for Booker shareholders to agree the deal is 75 percent and we only need a big minority of investors to vote against for the deal not to happen,” a spokesman for Sandell has told The Times. “ISS and Glass Lewis have supported our position and it is quite rare for them to take a position like this. We think Booker is a great company and Tesco should pay more.”
Not everyone opposes merger deal
Reuters, however, reported on Friday that two major institutional investors in the wholesaler were backing the deal.
“We are believers that the combination of Booker and Tesco can create long term value for our clients and hence support the deal,” Simon Brazier, UK fund manager at Investec Asset Management told the newswire. Reuters also quoted Stephen Anness, a fund manager at Invesco Perpetual, which also has a holding in Tesco, as commenting that he thought it was “a fair price for the company and what I‘m more interested in is the next 5 or 10 years of the combined businesses”.