CMA gives Tesco's £3.7bn Booker takeover the all clear

CMA gives Tesco's £3.7bn Booker takeover the all clear

'[We] found that Tesco as a retailer and Booker as a wholesaler - supplying to caterers, independent and symbol group retailers including Premier, Londis and Budgens - do not compete head-to-head in most of their activities, ' the regulator said in a statement.

The landmark merger between Tesco and the UK's largest wholesaler has been given the provisional go ahead from the Competition Markets Authority (CMA).

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

The CMA said competing wholesalers had expressed concerns Booker would benefit from improved suppliers' terms after the merger, making it hard for them to continue to compete.

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.

"With a higher shareholder hurdle and the Tesco share price below the level when the bid was made (about 2 pounds), Booker shareholders may argue for a higher share price", the broker's analysts said.

The regulator had been investigating whether shoppers and customers would have less choice as a result for merger. That at least seems to be the freakish message from the competition watchdog, on Tuesday rebranded as the "comedy markets authority" by wags at Shore Capital.

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

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However, it also concluded that the wholesale market would remain competitive in the longer term, noting that Booker's share of the United Kingdom grocery wholesaling market - at less than 20 per cent - was not sufficient to justify the longer-term concerns.

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

"This might increase competition in the wholesale market, as well as reducing prices for shoppers", the CMA said.

Those opposing or supporting the deal have until "early December" to try and influence the deal through writing to the CMA.

It's fair to say that maybe only Tesco and Booker's "Chas and Dave" were so cocksure about the deal sailing through regulators without any conditions.

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".

This week, Nisa members approved the takeover from The Co-op.

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