Supermarket group Tesco won provisional approval for its £3.7 billion of wholesaler Booker from the UK competition regulator on Tuesday, moving Britain's biggest retailer closer to securing a new avenue of growth.
The Competition and Markets Authority (CMA) said it had conducted an in-depth review and provisionally concluded that Tesco's purchase of Booker does not raise competition concerns.
Tesco’s move on Booker in January sparked further consolidation in Britain’s £185 billion grocery market as supermarkets seek additional sources of growth.
Analysts expect more M&A activity as supermarkets seek to utilise excess capacity within their supply chains.
“The wholesale trade in particular will be wondering why on Earth it ever bothered engaging at all with the CMA, an organisation that seemingly lives in a different universe,” said Shore Capital analyst Clive Black.
“If Tesco and Booker can merge with unconditional approval, then the scope for further large-scale consolidation cannot be ruled out,” he said.
The provisional clearance will come as a big relief to Tesco. Most analysts had expected it would have to agree to store divestments or restrictions on operations to gain clearance. – Reuters
