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Tesco gets provisional green light for £3.7bn Booker takeover

Tesco gets provisional green light for £3.7bn Booker takeover

Rivals raised competition concerns about the deal, but the watchdog said the supermarket giant and Booker do not compete "head-to-head" in most areas.

The Competition and Markets Authority has provisionally cleared Tesco's £3.7 billion merger with the cash-and-carry group Booker.

It had earlier raised fears that more than 350 local areas where there is an overlap with Booker-supplied franchises such as Premier, Londis, Budgens and Family Shopper could face "worse terms".

A raft of rival wholesalers have also raised concerns the deal could see Booker benefit from improved supplier terms making it hard for them to compete, according to the CMA. The CMA said rival wholesales argued Booker could raise prices to the shops it supplies.

"Tesco-Booker will be unlikely to be able to expand materially, given its existing store portfolio, but it will drive down margins with its sourcing advantage, and be able to invest in stores with the synergies released from the deal, and create a ubiquitous United Kingdom brand across food wholesale and retail".

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

Putin hosts Turkey's president for talks focusing on Syria
The U.S. -led coalition says it does not discuss the location of its forces. Neither leader went into more specific detail.

But on announcing its provisional findings, the CMA said Booker would be able to negotiate better terms from its suppliers for some of its groceries, and that it was likely to pass on these savings to the shops it supplies. This might increase competition in the wholesale market, as well as reducing prices for shoppers.

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

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

Tesco and Booker's market share prices jumped by 5.65 and 5.74 per cent respectively after the news this morning (14 November).

'It remains to be seen if there's a silent majority out there who will give the deal the nod, or whether the vocal critics of the proposals are reflective of wider discontent amongst the ranks of Tesco investors, ' said Laith Khalaf, senior analyst at Hargreaves Lansdown.


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