UK reg­u­la­tor clears Tesco’s £3.7bn Booker takeover

Kuwait Times - - Business -

LON­DON: Bri­tain’s competition reg­u­la­tor has given the green light to su­per­mar­ket gi­ant Tesco’s £3.7-bil­lion takeover of whole­saler Booker, it said yes­ter­day. The takeover, worth $4.8 bil­lion or 4.2 bil­lion eu­ros, has been pro­vi­sion­ally cleared by the Competition and Mar­kets Author­ity (CMA), it an­nounced in a state­ment. Tesco launched the block­buster deal ear­lier this year in a bid to be­come the na­tion’s top food busi­ness, slash costs and take on Ger­man-owned dis­count re­tail­ers.

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

“The CMA has pro­vi­sion­ally con­cluded that Tesco’s pur­chase of Booker does not raise competition con­cerns,” it said. The news sent Tesco’s share price surg­ing 6.36 per­cent to 188.25 pence in af­ter­noon trade on the ris­ing Lon­don stock mar­ket.

How­ever, shares have still shed around ten per­cent in value since the deal was un­veiled in late Jan­uary on fears it was over­pay­ing. “Tesco will be hop­ing that its sheer size and buy­ing power will help it fend off oth­ers in the sec­tor and re­store it as the na­tion’s fa­vorite su­per­mar­ket,” said an­a­lyst Gra­ham Spooner at stock­bro­ker The Share Cen­tre.

“The jury is likely to still be out for some time on that,” he added. Booker is the coun­try’s largest cas­hand-carry op­er­a­tor and sells goods to more than 503,000 cus­tomers-in­clud­ing gro­cers, pubs and restau­rants. It also owns con­ve­nience store chains Bud­gens, Londis and Premier, as well as trade-fac­ing Makro and Booker Whole­sale. “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 reg­u­la­tor added yes­ter­day. “In par­tic­u­lar, Tesco does not sup­ply the cater­ing sec­tor to which Booker makes over 30 per­cent of its sales.” In a brief state­ment, Tesco wel­comed the CMA news, adding that it ex­pected the takeover to com­plete in early 2018. “We look for­ward to cre­at­ing the UK’s lead­ing food busi­ness, bring­ing to­gether our com­bined ex­per­tise in re­tail and whole­sale,” it said.

“This merger has al­ways been about growth, and will bring ben­e­fits for in­de­pen­dent re­tail­ers, cater­ers, small busi­nesses, sup­pli­ers, con­sumers, and col­leagues.” Tesco is Bri­tain’s big­gest re­tailer but has been trou­bled in re­cent years by an ac­count­ing scan­dal and fierce do­mes­tic competition from Ger­man dis­count chains Aldi and Lidl.

In Oc­to­ber how­ever, the su­per­mar­ket group re­vealed it had re­bounded into first half net prof­its-and an­nounced it would re­sume div­i­dend pay­ments to share­hold­ers. Tesco is the world’s third-big­gest su­per­mar­ket chain af­ter France’s Car­refour and global leader Wal-Mart of the United States. —AFP

This file photo taken on Jan­uary 27, 2017 shows a com­bi­na­tion of pic­tures cre­ated in Lon­don on Jan­uary 27, 2017 from pic­tures taken in Lon­don on Jan­uary 27, 2017 shows the sig­nage on the front of a branch of a Tesco (top) su­per­mar­ket in Lon­don and sig­nage on the front of a branch of Booker (bot­tom) food whole­sale store in Lon­don. —AFP

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