Booker to buy two grocery chains in push for local shoppers

* 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 (LSE: BOK.L - news) , Britain's biggest cash-and-carry wholesaler, has agreed to buy the Londis and Budgens chains to expand its network of grocery and convenience 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, a privately owned Irish food wholesaler.

Booker's stock rose more than 11 percent to become the top gainer 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 convenience stores or online shopping, rather than large out-of-town sites.

Amid an industry price war, the acquisition will help Booker to lower prices and compete better with the country's big four supermarkets as they grow their own convenience store networks.

"We've seen for 60 years that the supermarket format was very strong. Now (NYSE: DNOW - news) we're seeing that the consumer is voting with their 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 percent in the year to April, according to market research firm IGD. The biggest growth came from "convenience multiples", a category that includes Tesco Express, Sainsbury's Local and McColls.

Booker's existing Premier (NasdaqGS: PINC - news) and Family Shopper brands are spread mostly throughout northern Britain and the Midlands. The company's acquisition of Londis and Budgens will give it a bigger retail presence in London and southeast England.

Wilson (Oslo: WILS.OL - news) said the company would retain these brands and develop an "under-utilised" supply chain network to deliver fresh and chilled goods to its stores.

"If we can use the Londis and Budgens trucks to deliver to the Premiers, that significantly improves the efficiency," he said.

Budgens was founded in 1872, before Tesco (Xetra: 852647 - news) and just three years after Sainsbury's. Its 167 neighbourhood supermarkets and stores, 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 retail grocers. It has 1,630 convenience stores and had sales of 504 million pounds in 2014.

Booker, which on Thursday reported a 17 percent rise in full-year operating profit, expects the acquisition to start adding to profit in the second full year after completion.

Its shares were up 10 percent at 167.12 pence at 1045 GMT. ($1 = 0.6436 pounds) (Additional reporting by Aastha Agnihotri in Bengaluru; Editing by Robin Paxton)