Schroders – which owns a 4.5% stake in Tesco – has written a letter to Tesco chairman John Allan arguing that the "high price" would destroy shareholder value. It is joined in its opposition to the deal by Artisan Partners, which also owns a 4.5% stake.
If Tesco were to acquire Booker, which owns convenience store brands Budgens and Londis, the UK’s largest supermarket would also become the UK’s largest cash-and-carry business, a deal that Tesco labelled "compelling". But the group needs backing from a majority of shareholders to allow the acquisition to go ahead.
According to the BBC, Schroders is adamant that Tesco should withdraw from the deal and instead focus on recovering from its woes, which include the imminent settlement by the Serious Fraud Office of Tesco’s accountancy scandal, which could see it fined more than £100m according to reports.
"There is more to be done to achieve a successful turnaround of Tesco's business," Schroders said.
Tesco issued a statement in response to the shareholder opposition in which it said the "since announcing the transaction the majority of our top 10 shareholders" had chosen to increase their holdings.
"We always listen closely to the view of our shareholders," a spokesperson said. "We have had a wide series of meetings over the last two months and are pleased with the overall response.
"We have been working on the transaction for over 12 months and believe the strategic and financial rationale is compelling. We are confident that it will enhance our recovery plans for Tesco and deliver substantial benefits to customers and shareholders."