Belinda Gannaway The City applauded Booker chief executive Stuart Rose for his £1bn "merger" with Iceland, this week. But it is not so bullish about what the deal does for the retailer. Iceland chairman and chief executive Malcolm Walker said although the deal was structured around an offer for Booker, it was a "true merger...not a takeover". The tie up ­ valuing Booker shares at 150p ­ follows the cash and carry's recovery from the days when its shares languished at 45p. Rose joined as chief executive two years ago. He will become chief executive of the new group with executive director Charles Wilson becoming chief executive of the Booker business. One analyst said: "Rose has certainly done something for Booker shareholders and he should be applauded." Iceland investors may have to wait a little longer for the benefits of the deal to show in the share price. The retailer's shares slipped 29p on the day of the deal. "Iceland shareholders have had a shock this morning. They had a certain bet in a quirky, niche retailer, now they own half a cash and carry business. Plus they will lose Malcolm Walker next year when he becomes a non-exec," he added. Credit Lyonnais analyst Paul Smiddy echoed this view describing Iceland shareholders as "underwhelmed". Analysts are, however, convinced by the buying and distribution synergies of the £5.5bn turnover group. It hopes to save £50m a year on merger costs of £20m. "The buying benefits are very significant and the deal will plug a lot of both players' weaknesses in terms of range. The upside in the medium term will be in distribution," Smiddy said. The jury is still out on how the deal will benefit the e-commerce aspirations of both groups. The deal is yet to be approved by shareholders. It came on the day Booker announced pre-tax profits for the year up £32m to £35.4m before exceptionals. - See analysis pages 16 & 17. {{NEWS }}

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