Tesco’s Booker takeover gets provisional go-ahead
15th November 2017
Tesco's £3.7bn takeover of Booker has got the provisional OK from the UK's competition regulator.
The Competition and Markets Authority (CMA) said the deal could actually increase competition in the wholesale market and reduce prices for shoppers, as reported by the BBC.
The CMA was satisfied that Tesco and Booker did not compete head-to-head in most activities.
Booker is the UK's largest food wholesaler, and also owns the Premier, Budgens and Londis store brands. More than 30% of its sales are to the catering sector, which Tesco does not supply, although it is would like to break into the market.
After taking submissions from across the grocery sector, the regulator has reached the provisional conclusion that Tesco won't need to offload any of its own own convenience stores for the deal to go through.
The CMA concluded that the wholesale market would remain competitive in the longer term, because Booker's share of the UK grocery wholesaling market, at less than 20%, was not sufficient to justify the longer-term concerns.
It found that competition is strong enough in both the wholesale and retail grocery sectors to ensure the merger between Tesco and Booker will not lead to higher prices or reduced service for either supermarket or convenience shoppers.
Tesco and Booker both welcomed the provisional decision and said they would continue to work with the CMA, which is due to publish its final report by the end of the year.
Tesco anticipates that the merger will be completed in early 2018.
Following the announcement, Tesco's shares rose by 5.7% and Booker's were up by 6.1%.
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