Budgens group checks out of merger talks with Booker
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Your support makes all the difference.BOOKER, the struggling cash and carry operator, was snubbed by its second suitor in less than three weeks yesterday when Budgens supermarket group pulled out of merger discussions.
The move follows a similar decision by Somerfield late last month, when it abandoned merger talks with Budgens saying the risks of the deal outweighed the benefits.
Budgens' decision pushed Booker's shares down 20 per cent to 117.5p, their lowest point since 1984.
Jonathan Taylor, Booker's chairman, conceded that the "absurdly low share price" might tempt financial buyers to make an approach. However, he said he had not yet received any other offers.
In an attempt to avoid the rancour that soured the collapse of Booker's talks with Somerfield, Budgens and Booker said their talks had been terminated "amicably and mutually".
Mr Taylor said the discussions had broken down because the fall in Booker's share price made structuring an all-share merger "almost impossible".
However, analysts said the fact that Booker had now been abandoned by two potential partners implied that each might have unearthed a problem in their due diligence processes.
In its statement Budgens said: "Whilst considerable potential synergies and benefits were expected from a combination of the two companies, having now reviewed the transaction in detail the board has decided against recommending a merger to shareholders."
Mr Taylor said Booker would press ahead with its plans to find a new chief executive, with an announcement expected in the next few weeks. The company will then dispose of non-core businesses and concentrate on improving margins in its cash and carry operations.
Mr Taylor bought 10,000 shares at 117p yesterday to signal his support for the group. He added that the financial costs of examining the two mergers could run "well into seven figures".
John von Spreckelsen, the Budgens' chief executive who would have run the enlarged group if the Booker deal had gone through, denied he might be seeking a greater challenge. "I am committed to Budgens," he said. "It is a successful company and we are well positioned to progress on our own."
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