Tesco is spending £3.7bn in a deal to buy the UK's largest cash and carry business Booker. Actually there is much more to Booker than being an old-style wholesaler; as is customary the boards of both businesses are confident about the likely commercial synergies should be the deal be given the go-ahead by the regulators.

This is a good example of backward vertical integration as retailer Tesco acquires wholesaler and logistics businesses Booker Group. It will be the UKs biggest food business. Each Booker shareholder will receive 0.861 Tesco shares and 42.6p in cash per Booker share.

The key part to the deal seems to be Tesco's drive to increase market reach to the out of home food market. They will have have market reach across stores, Booker's national Cash & Carry network, their home/business delivery capacity and Tesco's own Click & Collect.

For Budgen-owned businesses such as Premier, Londis, Budgens and Family Shopper, there is now scope to provide Tesco banking services in store.