Glass Lewis tells Booker shareholders to vote against Tesco’s £3.7bn takeover

An investor advisory firm has thrown another obstacle in the path to Tesco’s £3.7bn takeover of Booker, telling Booker shareholders to oppose the deal.

Glass Lewis told clients in a note today that it advised rejecting the deal, on the grounds that the bid “clearly lags regional trends” and may fall below Booker’s true value.

“Given what appear to be sturdy stand-alone prospects and ample liquidity – overseen, in each case, by a capable management team – we see little cause for Booker investors to support what appears to be a less than compelling control transaction,” advisers said.

This follows similar advice from the Institutional Shareholder Services (ISS), which said Booker shareholders should reject Tesco’s “less than compelling” offer.

Booker shareholders will vote on the takeover next Wednesday. Some 75 per cent of the votes cast must support the merger for it to go ahead.

Read more: Big Tesco shareholder opposes Booker takeover: Schroders’ letter in full

The merger has faced several difficulties, including intense scrutiny from the competition watchdog, which finally cleared the deal in December.

Sandell Asset Management, which owns around 1.8 per cent of Booker’s shares, has urged fellow shareholders to vote against the deal, saying that Tesco has lower returns and that the premium of the offer was comparatively low.

There has also been opposition from inside Tesco. Last year the late Richard Cousins left the board of the supermarket over the proposed transaction. Major shareholders Schroder’s and Artisan, which between them hold more than eight per cent of the shares, also said they were opposed.

But the firm also said that Tesco shareholders should back the merger, even though the integration of Booker could be a “potentially problematic and costly undertaking”.

Read more: Tesco’s Cardiff call centre has closed slashing 1,100 jobs