Tesco’s £3.7bn takeover of Booker is given the green light
Tesco’s £3.7bn takeover of food wholesaler Booker Group has been given the provisional go-ahead by the competition watchdog.
The announcement brushes aside warnings that the deal would allow the supermarket giant to crush rival suppliers to restaurants and smaller stores.
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Booker is the UK’s largest food wholesaler with brands such as Premier, Budgens and Londis
Tesco has 3,200 UK stores whereas Booker supplies 117,000 independent retailers.
If the deal went ahead, Tesco would become Britain’s biggest food wholesaler, with an estimated turnover close to GBP£60bn.
This is a move which several of Booker’s rivals including Spar say should be blocked.
Simon Polito, Chairman of the Competition and Markets Authority (CMA) inquiry group, said that the investigation found that “existing competition is sufficiently strong in both the wholesale and retail grocery sectors”.
The CMA provisionally said that the two groups did not compete head-to-head in most of their activities.
It notes that this was particularly the case in the catering sector, where Booker makes 30% of its sales and Tesco does not have a presence.
The deal also requires support from more than 50% of Tesco shareholder and 75% of Booker shareholders respectively.
The retail sector has seen shifting trends in recent times.
With changing consumer habits, fierce competition from discount retailers like Lidl and the entry of Amazon has encouraged retailers to bolster their businesses by buying food wholesalers.
This week, Nisa’s £137mn takeover of the Co-operative Group was approved and Morrisons has also recently signed a deal to become the UK wholesale supplier to c-store chain McColls