Booker demonstrates opportunities from acquisition

We hear endless talk about the opportunities and profit that businesses can make through careful acquisitions, but it's great to see some real case studies now and then.

Booker is the latest company to show some significant gains following its buyout of cash-and-carry group, Makro.

Even excluding Makro's contribution, Booker's revenue was up 3.5 per cent to £4 billion when it announced its financial details earlier this week. Its pre-tax profit had also shot up by 13 per cent to £101 million.

It seems that the buyout has improved perceptions of both businesses. Charles Wilson, Booker chief executive, commented: “Customers are beginning to see some Booker lines going into Makro and Makro lines going into Booker. That will improve price perceptions particularly for Makro.”

He added that the tie-up will result in “choice, price and service improving and a lot of 'delivered growth'”.

Analysts are also seeing some positive changes come through and are already predicting good things for both businesses. Philip Dougan, an analyst with Panmure Gordon, told The Times: “We are assuming that Makro will enhance earnings from year one, and we believe that there is upside potential to our long-term forecasts.”

Booker's acquisition has given it a new route to quick expansion, even during the economic downturn, and it should help the company to continue to increase its revenues working in a sector that it already has a sound working knowledge of.

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