Booker/Tesco deal could prompt demand from regulator for disposal of 635 stores - report
02 FEB 2017
Tesco [LON:TSCO] could face a forced sale of 635 stores unless it is able to persuade competition regulators that its proposed acquisition of the UK-based wholesaler Booker Group [LON:BOK] will not be detrimental to competition, according to an analysis by The Times.
Tesco has 635 stores located within 500 metres from one of Booker’s Budgens, Londis and Premier stores, according to the newspaper. That has raised concerns about the implications of the deal for competitors, consumers and suppliers, the item said.
Industry experts think the UK’s Competition and Markets Authority (CMA) will scrutinise the deal closely, the report said, adding that officials could force the merged group to make store disposals.
Booker CEO Charles Wilson has argued that the deal works in favour of competition for caterers and retailers, who would have a wider choice, better prices and service, the article continued.
Booker and Tesco will probably argue that their retail operations have no overlap and that the deal is more like Bookers' GBP 40m takeover of the convenience store chains Budgens and Londis, the item said. The CMA approved that deal in 2015 after a phase one investigation.
It is understood that competing convenience store chains intend to challenge the deal, the item said.
A report from this news service on 31 January cited independent competition lawyers who said the CMA is likely scrutinise the deal’s vertical overlaps more closely than its possible horizontal aspects.
Booker’s market capitalisation stood at GBP 3.62bn (EUR 4.25bn) at the close of trading in London on Wednesday, 1 February.