Nov 14, 2017

Tesco wins provisional approval for £3.7bn Booker takeover

The UK competition watchdog has provisionally cleared Tesco's £3.7bn takeover of food wholesaler Booker, brushing aside warnings that the supermarket giant could crush rival suppliers to restaurants and small stores. The Competition and Markets Authority said it had provisionally found that the two groups did not compete head-to-head in most of their activities particularly in supplying the catering sector, where Booker makes 30 per cent of its sales and Tesco does not have a presence. Simon Polito, chair of the CMA inquiry group, said: "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." Rival companies, which supply hundreds of convenience stores that compete with Tesco's small-format stores, claimed that allowing Tesco to buy Booker would "Not just result in a substantial lessening of competition but in a complete restructuring of the wholesale and retail of groceries in the convenience and food service sectors". The deal also requires support from 75 per cent of Booker shareholders, who have watched the value of Tesco shares fall since the takeover was announced and could demand more equity in the combined business.

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