Tesco gets provisional green light for £3.7bn Booker takeover

TESCO  BOOKER

The CMA examined 12,000 locations where a branch of Tesco competes with a Booker-supplied shop and concluded competition was sufficient to prevent prices from going up.

The CMA's findings are surprising given its previous concerns over the deal, which was first announced in January.

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

It also decided the merger could bolster competition in the wholesale sector, rather than dent it as many of Booker's competitors argued, because the firm could benefit from improved suppliers' terms - with the savings being passed on to its own customers.

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

Tesco won provisional approval for its 3.7 billion pound ($4.9 billion) takeover of wholesaler Booker from the United Kingdom competition regulator on Tuesday, moving Britain's biggest retailer closer to securing a new avenue of growth.

The regulator is now inviting further comments and evidence before coming to a final conclusion.

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.

Booker, in its statement, said it will continue to work with the competition regulator ahead of its final decision, which is due in December.

Welcoming the decision, Tesco said: "We look forward to creating the UK's leading food business, bringing together our combined expertise in retail and wholesale".

Bernstein analysts said they expect some uncertainty to remain, with the focus shifting to whether investors will approve the deal.

On May 31 the authority said that it would investigate Tesco's proposed 3.7 billion-pound ($4.3 billion) cash-and-stock offer for Booker. Tesco said it expected to complete the deal, which also requires shareholder approvals, in early 2018.

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