Friday, 27th January: Before the market open the UK’s biggest retailer Tesco announced they had agreed to buy the food wholesaler Booker for £3.7bn. Alongside this, they also announced that they are planning to begin their dividend programme once more, after being on hold since December 2014. The deal for Booker is a cash-and-share deal whereby Booker shareholders will get 0.861 new Tesco shares and 42.6p in cash for each share held. It would ultimately mean Booker shareholders will hold around 16% of the new, combined group. Should the deal go ahead it would mean Tesco gain exposure to supplying cafes, restaurant and pub trade; Booker’s currently supplies 450,000 catering outlets including Wagamama and also own about 200 cash and carry warehouses, supplying convenience shops such as Londis. Both companies traded higher at the open, and continued to do so over the course of the day. Booker surged ahead >16% while Tesco traded higher by more than 10% intra-day.
US President Donald Trump and UK Prime Minister Theresa May are set to meet later today. It is Trump’s first meeting with a foreign leader since taking charge. It is thought discussions will focus on NATO and Russia, of which the two leaders have different stances on. They will also discuss trade between the two nations, which May is eager to get agreed as she looks to make the UK’s exit from Europe as stable as she can. The meeting is expected to conclude with a joint White House conference.
Mexico and the US were of discussion in the blog yesterday. The two leaders were set to meet next week but last night the Mexican President cancelled the meeting. After Trump said the Mexicans should cancel the meeting if they had no intention of paying for the US-Mexico border, the Mexican leader did just that. Further so, the US claim they can get the money for the wall by putting a 20% tax on imported goods from Mexico.
The surge from Tesco, who closed the day +9.29%, helped the FTSE gain 0.32%. BT released a Q3 trading update, but the results were overshadowed by the Italian accounting scandal that had been announced earlier in the week. The group confirmed their head of continental Europe would step down following the rather large write-down they are set to incur.