It is quite rare in today's M&A world that a deal is announced which catches the competitors of the instigating company unaware, but late last week such a deal occurred. The said deal was announced by Tesco and related to the company's proposed acquisition for GBP 3.6bn of food wholesaler Booker Group, which also owns both the retail chains of Londis and Budgens.

Taken at face value one might think this is only about expanding Tesco's convenience retail market, which it currently services using its "Tesco Metro" stores. However, the clues are in the statement about the deal made by Tesco's CEO, Dave Lewis: "This merger with Booker will further enhance Tesco's growth prospects by creating the UK's leading food business with combined expertise in retail, wholesale, supply chain and digital".

Not only will Tesco get access, via the deal, to over 5,000 more high street convenience stores, but it will also provide Tesco with the ability to reduce food waste by improving its supply chain via Booker in terms of improved efficiencies "from farm to retailer".

One additional upside of this deal for Tesco is that the Booker food service arm supplies a number of UK-wide high street restaurant chains, so whilst retailers are facing tougher competition for household shoppers, there is a revenue stream available for Tesco's that they previously have not had access to. So, it is no surprise the shareholders of both companies seem sold on the deal at the moment!