A fund manager at one of Tesco’s major shareholders has expressed ‘major concerns’ over Tesco’s planned £3.7billion bid for Booker. Tesco is bidding for the retail giant in a large part for access to its network of smaller franchises and convenience stores that can be used for its click & collect business.

“Booker is a business that has been doing extremely well, its profits have been growing very quickly and profit margins have been expanding rapidly,” said Kirrage.

“Tesco have had to pay a premium and have made an assumption that profits are going to continue to grow in the future.

“History suggests that the vast bulk of acquisitions destroy value for the acquiring shareholders in instances where you buy a high multiple.

“Even fewer deals create value and so we objectively think, looking back at history, that this is a deal that is going to struggle to create value. We have major concerns about it.”

Despite Schroders’ concerns, Tesco’s CEO Dave Lewis has said that the supermarket chain is still “completely committed” to the Booker deal.

The tie up could have major implications for the UK parcel delivery business. As well as the wholesale chain, Booker has the Londis franchises and the Budgens chain of convenience stores, totalling around 4,000 outlets. With Tesco’s existing 3,500 this would create a huge network across the UK, all of which could be used as click & collect points.

In a conference call with City analysts in February, Tesco’s Lewis argued that the expanded click and collect network would be beneficial to both Tesco and the independent store owners.

“Consider the idea that through this merger and through a network of close to 8000 click-and-collect points we would drive traffic to those independent stores as a way of giving more service from the combined operation,” Lewis was quoted as saying.  
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