By Ian Walker

LONDON-- Tesco PLC, the U.K.'s number one grocer by market share, has agreed to buy food wholesaler Booker Group PLC for GBP3.7 billion ($4.66 billion).

The supermarket chain also said Friday that it plans to restart paying dividends in fiscal 2018, reflecting the company's improved performance. It last paid a dividend in December 2014.

Tesco said the cash-and-share deal for Booker would benefit its customers and staff as well as generate value for shareholders. The companies expect to achieve pretax profit synergies of at least GBP200 million a year by the third year of completion andrevenue synergies of at least GBP25 million a year.

Booker shareholders will get 0.861 new Tesco shares and 42.6 pence in cash for each share held, giving them about a 16% share of the combined group.

Booker Chief Executive Charles Wilson and Chairman Stewart Gilliland will join the combined company's board after the deal.

Write to Ian Walker at ian.walker@wsj.com

(END) Dow Jones Newswires

January 27, 2017 02:47 ET (07:47 GMT)

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