CMA gives Tesco's £3.7bn Booker takeover the all clear

Tesco Expected To Announce Turnover Figure Of £1 Billion Per Week

Tesco Expected To Announce Turnover Figure Of £1 Billion Per Week

The landmark merger between Tesco and the UK's largest wholesaler has been given the provisional go ahead from the Competition Markets Authority (CMA).

Despite positive results in October, some investors warned that the supermarket giant was not in strong enough shape to execute the merger at present.

The regulator denied concerns by wholesalers and symbol groups that the deal would give Tesco the ability to harm its rivals through its newly acquired wholesale arm.

The CMA said Tesco and Booker do not compete "head-to-head" in most areas in which they operate, in particular the catering sector, where Booker makes more than 30% of its sales.

"Our investigation has found that existing competition is sufficiently strong in both the wholesale and retail grocery sectors to ensure that the merger between Tesco and Booker will not lead to higher prices or a reduced service for supermarket and convenience shoppers", Simon Polito, Chair of the CMA inquiry group, commented in the statement.

Earlier fears during the investigation were that there is an overlap with Booker-supplied franchises such as Premier, Londis and Budgens.

The regulator accepted that Booker Wholesale's prices would be lower than rivals in some areas due to the deal, but did not acknowledge the impact on Booker's retail customers, only on consumers.

It also found that the deal would allow Booker to negotiate better terms with its suppliers for some of its groceries but that it... The regulator asserted the United Kingdom wholesale market would "remain competitive in the longer term", noting Booker's share of the United Kingdom grocery wholesaling market - at less than 20% - was "not sufficient to justify the longer-term concerns".

Critics saw the deal as creating a business that would bring together the Tesco Express convenience-store chain with other United Kingdom c-store retailers like Budgens, Londis and Premier.

Yesterday, The Co-op, the UK's sixth-largest food retailer, took a step nearer buying the local convenience-store and wholesale business Nisa after winning the support of its target's members.

Retail analyst Bruno Monteyne at Bernstein said the tie-up would make Tesco "not only the biggest grocer in the United Kingdom but also one of the fastest growing food retailers in the United Kingdom for many years to come". Tesco said it expects the deal to conclude in early 2018.

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

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