Given that it is still trying to get over having mis-stated its profits by £263m during 2014, it seems rather apt that Tesco is buying a business best-known for sponsoring a fiction prize.
Yes, Britain’s largest supermarket group is acquiring Booker, the UK’s largest food wholesaler and the company behind the Londis and Budgens convenience chains.
The £3.7bn deal, which was unveiled on Friday, will supposedly create the UK’s leading food business in a £195bn market. The companies claim that will “bring benefits for consumers, independent retailers, caterers, small businesses, suppliers, and colleagues, as well as delivering significant value to shareholders”.
From this week, we might start to see if shareholders and regulators agree, as documents are made available and the process of addressing possible competition concerns begins.
There may be another process gathering some pace this week, too – that of a few hedge fund managers desperately trying to justify why they thought it was clever to bet on a fall in Tesco’s shares, just as news of the deal prompted a 10% increase.
Delores Holdings, Marshall Wace and Pelham Long/Short Master Fund all shorted the grocer’s stock (the first two did so in the past fortnight), so they have until tomorrow to devise some plausible line explaining why.
The Conn school of corporate calamities
If you find yourself standing next to Iain Conn this week, move. Sharpish. The chief executive of British Gas owner Centrica is fast establishing a reputation as the chap in the City who is always in the wrong place at the wrong time.
Obviously there was British Gas’s £9.5m fine last week for IT failures that landed business customers with incorrect and late bills. But elsewhere, Conn really is in the middle of a seriously unfortunate trot.
He was the senior independent director at Rolls-Royce in 2010 – and he was on the board from 2005 to 2014 – which suddenly looks awkward following Lord Justice Leveson’s judgment this month that the company was aware in 2010 of corruption allegations within the company, but decided not to notify the Serious Fraud Office.
Then there is Conn’s directorship at BT Group, where last week an accounting scandal in the telco’s Italian arm blew up, prompting the shares to be written down by 20%. Conn sits on BT’s audit committee.
All of which must leave shareholders in Centrica facing a nervous few weeks. The firm reports results next month.
Don’t bet on the future of gambling machines
“In a casino, the cardinal rule is to keep them playing and keep them coming back. The longer they play, the more they lose. In the end we get it all.” As this page is fond of pointing out, that’s how Robert De Niro’s character, Ace Rothstein, explained the gambling industry in the 1995 film Casino.
Remember his words this week, when the Fixed Odds Betting Terminals (FOBT) All Party Parliamentary Group publishes its report on those controversial betting machines in bookies’ shops, which allow punters to gamble on games such as roulette.
Each of these terminals makes about £1,000 profit a week (though no shop can have more than four) and they are so addictive (to bookies and punters) that they have often achieved Ace’s aim and taken a punter for everything.
When the group produced its interim report in December, it said “the government now has a prima facie case for significantly reducing the £100 stake ... The group sees a strong case for the stake being set at £2”.
It seems unlikely to soften that position this week – and few will shed any tears about that. Still, in an intriguing footnote, the companies funding this work include Bacta – the amusement arcades trade body – and Hippodrome Casino, both of which might want to nobble bookmakers.
