Tesco's £3.7bn takeover bid for Booker provisionally cleared by CMA

TESCO  BOOKER

TESCO BOOKER

Last month seven of the UK's largest wholesalers who all voiced concerns that the deal would "threaten the survival of the independent retailer".

"My only concern would be for local suppliers that supply Bookers, will Tesco dictate what price they are willing to pay for their goods and squeeze their margins even more", says Patel.

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 competition regulator has provisionally cleared Tesco's £3.7bn deal to buy wholesaler Booker.

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One of the major concerns for independent retailers previously highlighted by the regulator were fears that Tesco would increase Booker's wholesale prices to independent retailers in order to drive sales in its Tesco Express and One Stop stores.

It had raised worries that there could be a potential for Booker to reduce the wholesale services or terms it offers the stores it now supplies, in order to drive customers to their local Tesco.

Panel members at the CMA investigated how bringing together the UK's largest grocery retailer and the UK's largest grocery wholesaler, which supplies the pub sector, would affect competition. Strong competition in the market ensures that shoppers can choose the best deal for them.

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.

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The regulator concluded the would "remain competitive in the longer term", because Booker's share of the market is less than 20 percent, and therefore "not sufficient to justify the longer-term concerns".

The U.K. regulatory body referred the merger for further investigation in July as it believed the deal could lead to worse terms for shoppers.

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". "We anticipate completion of the merger in early 2018".

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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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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