Tesco's £3.7bn takeover bid for Booker provisionally cleared by CMA

Shares in Tesco (LON:TSCO) have jumped almost five percent in London this morning, as Britain's competition watchdog cleared provisionally the grocer's tie-up with wholesaler Booker Group (LON:BOK). In particular, Tesco does not supply the catering sector to which Booker makes more than 30% of its sales.

Tesco is now hoping the deal will complete in early 2018 (PA).

The CMA said it recognised that Tesco's stores compete with Booker-supplied shops, and said it considered the impact of the merger in every local area where a Tesco and a Booker-supplied shop are both present - more than 12,000 shops.

A raft of rival wholesalers have raised concerns the deal could see Booker benefit from improved supplier terms making it hard for them to compete.

Tesco is the UK's largest grocery retailer by some margin, while Booker is the largest wholesaler - supplying many of Tesco's competitors. This might increase competition in the wholesale market, as well as reducing prices for shoppers.

In a statement following the CMA's provisional clearance, Tesco said: "We look forward to creating the UK's leading food business, bringing together our combined expertise in retail and wholesale".

"This merger has always been about growth, and will bring benefits for independent retailers, caterers, small businesses, suppliers, consumers and colleagues", it added.

The blue-chip grocer welcomed the decision in a statement, noting that it would continue to work with the watchdog as it prepares its final report due by the end of the year.
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