UK Watchdog Clears Tesco's GBP3.7 Billion Booker Acquisition

The CMA is to prepare a final report on the proposed Tesco Booker merger

The CMA is to prepare a final report on the proposed Tesco Booker merger

"In particular, Tesco does not supply the catering sector to which Booker makes over 30% of its sales", the CMA said.

Tesco operates more than 3,000 stores across the United Kingdom, while Booker supplies more than 5,000 stores under the Premier, Londis, Budgens and Family Shopper brands, as well as thousands of independent retailers and caterers.

A group of independent CMA panel members considered the possible implications of the merger in every local area where a Tesco store and a Booker-supplied shop were present, totalling over 12,000 shops.

An investigation into the deal by the Competition and Markets Authority (CMA) found that Britain's biggest supermarket chain and Booker, owner of convenience chains including Londis and Budgens, do not compete head-to-head in most of their activities.

The CMA announced in January that it was referring the deal for an in-depth investigation over concerns that the tie-up could result in higher prices for shoppers in about 350 areas across the UK.

Britain's competition regulator has given the green light to supermarket giant Tesco's £3.7-billion (S$6.60 billion) takeover of wholesaler Booker, it said Tuesday.

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 provisional decision will now be issued for comment and further evidence before a final sign-off.

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".

Mr Monteyne said: "With a higher shareholder hurdle and the Tesco share price below the level of when the bid was made - around £2 - Booker shareholders may argue for a higher share price".

Separately, Booker said it welcomed today's announcement from the Competition & Markets Authority that it has provisionally cleared the company's proposed merger with Tesco plc.

The regulator is due to report its final findings in December.

Bernstein analysts said they expect some uncertainty to remain, with the focus shifting to whether investors will approve the deal.

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