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Tesco merger with Booker gets provisional approval from CMA

14 November 2017

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).

Tesco's £3.7 billion takeover of wholesale group Booker has been given the provisional green light after the competition watchdog said it would not lead to higher prices or hit service for shoppers.

Tesco is the UK's largest grocery retailer by some margin while Booker is the largest wholesaler - supplying many of Tesco's competitors.

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.

Tesco as a retailer and Booker as a wholesaler supplying caterers and independent retailers including Premier, Londis and Budgens, do not compete head-to-head in most of their activities, the CMA said.

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Shares in Tesco (LON:TSCO) have jumped almost five percent in London this morning, as Britain's competition watchdog cleared provisionally the grocer's tie-up with wholesaler Booker Group (LON:BOK).

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.

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.

It also found that the deal would allow Booker to negotiate better terms with its suppliers for some of its groceries but that it...

The Competition and Markets Authority said its in-depth investigation in to the proposed merger had raised no competition concerns.

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The CMA began its investigation in May and launched an in-depth probe in July after Tesco and Booker asked for the inquiry to be fast-tracked.

Tesco said it will continue to work with the CMA as it prepares its final report due at the end of December.

But he said the focus will now shift on to whether investors will approve the takeover, with 75% of Booker shareholders required to vote in favour.

"The risk is that just as the good ship Tesco is steadying, it gets blown off course by the Booker deal", he said. Tesco now expects the merger to complete early next year.

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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Tesco merger with Booker gets provisional approval from CMA