When good management meets a bad business, the business usually wins, Warren Buffett famously observed.

Did Mr Buffett ever come across the team at Booker? The UK wholesaler floated in 2007; the share price then was around 24p. Now it is 170p, and shareholders have also received 15.5p of dividends and capital returns (with another 7.16p to come).

So its managers are entitled to say “trust us” as they pay £40m in cash for what looks like a pretty lousy business and make only vague promises on returns. Musgrave, the owner of 1,800 Londis and Budgens franchised convenience stores, is facing food price deflation and the big supermarket chains are muscling in on its turf. Sales are falling, and it is lossmaking.

Booker already owns 3,000 similar franchised stores. Combining them with Musgrave’s will increase exposure to the south east of England and add scale. Simple, but effective.

Email the Lex team at lex@ft.com

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