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UK regulator gives provisional approval to Tesco-Booker deal

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TESCO  BOOKER

The Competition and Markets Authority (CMA) said it founded that the merger between Tesco and Booker, a wholesaler which supplies the Premier, Londis and Budgens convenience stores, would not threaten competition.

The regulator ruled Tuesday that the pair do not compete head-to-head in most of their activities. "Strong competition in the market ensures that shoppers can choose the best deal for them", said Simon Polito, chair of the inquiry group.

The CMA also considered the impact of the merger in every local area where a Tesco and a Booker-supplied shop were both present (more than 12,000 shops).

A number of competing wholesalers expressed concern that Booker would benefit from improved suppliers' terms after the merger, making it hard for them to continue to compete.

It said they argued that Booker could raise prices to the shops it supplies. This might increase competition in the wholesale market, as well as reducing prices for shoppers.

Even if Tesco wins final approval from the CMA, the supermarket may find it challenging to convince shareholders of the deal.

Booker is the country's largest wholesaler and owns Londis and Budgens as franchised outlets, and the CMA has previously said it was anxious that shoppers could face worse terms when buying their groceries as a result of the deal.

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"The CMA has provisionally concluded that Tesco's purchase of Booker does not raise competition concerns", it said.

We will continue to work with the CMA as it prepares the Final Report due by the end of December.

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 has received the green light for a £3.7 billion takeover of Booker.

'It remains to be seen if there's a silent majority out there who will give the deal the nod, or whether the vocal critics of the proposals are reflective of wider discontent amongst the ranks of Tesco investors, ' said Laith Khalaf, senior analyst at Hargreaves Lansdown.

As of 09:28 GMT, Tesco's share price had added 4.55 percent to 185.05p, outperforming the broader United Kingdom market, with the benchmark FTSE 100 index now standing 0.12 percent higher at 7,423.98 points.

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