* To buy Londis and Budgens chains for 40 mln stg in cash
* Deal will expand network of grocery and convenience stores
* Londis and Budgens strong in London, southeast England
* Booker shares up more than 11 pct; top FTSE-250 gainer (Adds CEO comment, details, updates share price)
By Roshni Menon
May 21 (Reuters) - Booker Group Plc, Britain'sbiggest cash-and-carry wholesaler, has agreed to buy the Londisand Budgens chains to expand its network of grocery andconvenience stores and tap into changing consumer habits.
Booker said it would pay 40 million pounds ($62.2 million)in cash to buy the two chains from the Musgrave Group, aprivately owned Irish food wholesaler.
Booker's stock rose more than 11 percent to become the topgainer on London's FTSE-250 Midcap Index on Thursday.
British consumers are shopping around for the best prices,buying little and often and increasingly opting for conveniencestores or online shopping, rather than large out-of-town sites.
Amid an industry price war, the acquisition will help Bookerto lower prices and compete better with the country's big foursupermarkets as they grow their own convenience store networks.
"We've seen for 60 years that the supermarket format wasvery strong. Now we're seeing that the consumer is voting withtheir feet," Booker Chief Executive Charles Wilson told Reuters."Independent convenience stores are doing a much better job."
The number of convenience stores in the UK grew 1.3 percentin the year to April, according to market research firm IGD. Thebiggest growth came from "convenience multiples", a categorythat includes Tesco Express, Sainsbury's Local and McColls.
Booker's existing Premier and Family Shopper brands arespread mostly throughout northern Britain and the Midlands. Thecompany's acquisition of Londis and Budgens will give it abigger retail presence in London and southeast England.
Wilson said the company would retain these brands anddevelop an "under-utilised" supply chain network to deliverfresh and chilled goods to its stores.
"If we can use the Londis and Budgens trucks to deliver tothe Premiers, that significantly improves the efficiency," hesaid.
Budgens was founded in 1872, before Tesco and just threeyears after Sainsbury's. Its 167 neighbourhood supermarkets andstores, some of which can be found on petrol station forecourts,had sales of 329 million pounds last year.
Londis was set up in 1959 by a group of independent retailgrocers. It has 1,630 convenience stores and had sales of 504million pounds in 2014.
Booker, which on Thursday reported a 17 percent rise infull-year operating profit, expects the acquisition to startadding to profit in the second full year aftercompletion.
Its shares were up 10 percent at 167.12 pence at 1045 GMT. ($1 = 0.6436 pounds) (Additional reporting by Aastha Agnihotri in Bengaluru; Editingby Robin Paxton)
