Tesco Takeover of Booker Cleared
Tesco has strengthened its grip on the UK’s food market, as its takeover of the wholesale company Booker has been approved. The competition regulator issued final approval for the 3.7 billion pound takeover today.
The ruling means that Tesco and Booker shareholders will be able to vote on the transaction. The vote is scheduled to take place in February, with the deal completing the following month.
The Booker deal is a bold move being made by Tesco’s Chief Executive, Dave Lewis, and it gives the supermarket group the chance to take advantage of the fast-growing ‘out of home’ food market. Booker plays a major role as a distributor not just for supermarkets, but also for the wider food and catering industry. Booker’s clients include Carluccio’s, Wagamama, and Byron, and they also work with thousands of independent catering companies too.
Booker owns around 200 warehouses in the UK, and is a supplier to a number of convenience stores, icndlufind Gamily Shopper, Budgens and Londis. Tesco’s acquisition of this means that it will have a major foothold in those markets.
The takeover has been awarded with unconditional approval, which came as a surprise to analysts, and was disappointing for wholesalers and retail rivals, who thought that the regulator would require some divestments, or place restrictions on the operations. The CMA, however, says that they listened carefully to the feedback from retailers and wholesalers, and they are comfortable that the acquisition will not cause problems, as retailers shop around for the best prices and service from wholesalers, and retailers do have a wide range of choice in that sector.
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