February 20, 2018 / 3:26 PM / in 3 months

Investor adviser Glass Lewis urges Booker investors to oppose Tesco deal

LONDON (Reuters) - Investor advisory firm Glass Lewis has urged shareholders in British wholesaler Booker Group BOK.L to reject a takeover by retailer Tesco (TSCO.L), dealing a fresh blow to the proposed 3.7 billion-pound ($5.2 billion) deal.

FILE PHOTO: A company logo is pictured outside a Tesco supermarket in Altrincham, Britain April 16, 2016. REUTERS/Phil Noble/File Photo

The premium offered by Tesco’s shares-and-cash bid “clearly lags regional trends,” and Booker shareholders should vote against the deal at a meeting on Feb. 28 called to approve it, Glass Lewis told clients in a report on Tuesday.

“We see little cause for Booker investors to support what appears to be a less than compelling control transaction,” the advisory firm concluded.

Opposition to the takeover by Britain’s biggest retailer has mounted this month ahead of the vote by Booker investors, in which the backing of 75 percent of the wholesaler’s shareholders is needed for the deal to proceed.

Advisory firm Institutional Shareholder Services last week recommended that Booker investors reject the bid, while activist hedge fund Sandell Asset Management, which has a 1.75 percent stake in the wholesaler, has pledged to vote against the deal unless Tesco improves the terms it has offered.

The acquisition, agreed in January 2017, has also faced criticism from Tesco’s own shareholders, with major investors Schroders and Artisan Partners coming out against it in March last year.

The late Richard Cousins also resigned as senior independent director on Tesco’s board in protest against the deal, which its chief executive Dave Lewis hopes will cement the supermarket group’s dominant position in Britain’s food market.

    Reporting by Ben Martin; Editing by Edmund Blair and Mark Potter

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