Tesco merger with Booker gets provisional approval from CMA

14 November, 2017, 14:27 | Author: Leticia Walters
  • TESCO  BOOKER

Tesco is the UK's biggest supermarket chain and Booker the largest wholesaler, supplying 5,400 stores operating under the Londis, Premier and Budgens brands as well as restaurants, bars, schools and hospitals. In particular, Tesco does not supply the catering sector, which accounts for over 30 per cent of Booker's sales, the report said.

The UK competition regulatory has provisionally cleared Tesco PLC's GBP3.7 billion takeover of food wholesaler and cash-and-carry operator Booker Group PLC.

It comes despite the CMA having earlier raised fears over 350 local areas of overlap between Tesco and Booker where it feared the deal could lead to "worse terms".

A number of competing wholesalers had expressed concern that Booker would benefit from improved suppliers' terms after the merger, making it hard for them to continue to compete. The CMA said rival wholesales argued Booker could raise prices to the shops it supplies.

The CMA's findings are surprising given its previous concerns over the deal, which was first announced in January.

"This might increase competition in the wholesale market, as well as reducing prices for shoppers", the CMA said.

The CMA opened its phase 1 investigation into the merger in May.

The CMA said the competitive landscape looked generally rosy because Booker had less than a 20% share of the United Kingdom grocery wholesaling market.

The regulator is now inviting further comments and evidence before coming to a final conclusion.

The CMA has provisionally concluded that the level of competition in the grocery wholesale and retail markets would be sufficient to defeat such a strategy.

Booker, in its statement, said it will continue to work with the competition regulator ahead of its final decision, which is due in December.

As of 09:28 GMT, Tesco's share price had added 4.55 percent to 185.05p, outperforming the broader United Kingdom market, with the benchmark FTSE 100 index now standing 0.12 percent higher at 7,423.98 points.

But while the CMA's findings remove uncertainty over the deal, he said the focus will now shift on to whether investors will approve the takeover.

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