Green light for Tesco/Booker merger

The CMA is to prepare a final report on the proposed Tesco Booker merger

The CMA is to prepare a final report on the proposed Tesco Booker merger

The regulator ruled Tuesday that the pair do not compete head-to-head in most of their activities.

In particular, it found tha Tesco does not supply the catering sector to which Booker makes over 30 percent of its sales.

The UK competition regulatory has provisionally cleared Tesco PLC's GBP3.7 billion takeover of food wholesaler and cash-and-carry operator Booker Group PLC.

It had earlier raised fears that more than 350 local areas where there is an overlap with Booker-supplied franchises such as Premier, Londis, Budgens and Family Shopper could face "worse terms".

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

The CMA opened its phase one investigation into the merger in May.

It said they argued that Booker could raise prices to the shops it supplies.

The Competition and Markets Authority (CMA) said, after conducting an in-depth review, that it had provisionally concluded that Tesco's purchase of Booker does not raise competition concerns.

While 50% of Tesco investors must give the deal the green light, the threshold is 75% for Booker shareholders. At the end of June, the companies requested a fast-track referral to the next stage of the investigation.

But on announcing its provisional findings, the CMA said Booker would be able to negotiate better terms from its suppliers for some of its groceries, and that it was likely to pass on these savings to the shops it supplies.

Tesco unveiled the blockbuster deal in January in a bid to become the nation's top food business, slash costs and take on German-owned discount retailers.

"This merger has always been about growth, and will bring benefits for independent retailers, caterers, small businesses, suppliers, consumers and colleagues", a Tesco spokesperson said.

The regulator is due to report its final findings in December.

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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