Ten things you need to know about Tesco-Booker deal

Booker announces profit, takeover by Tesco on track

  1. British wholesaler group Booker announced today that it expects its £3.7bn takeover by retail giant Tesco to complete by early next year, as it reported a 9 per cent hike in its first-half profit.
  2. Tesco boss Dave Lewis had announced the takeover plan of Booker group early this year. But soon after the announcement, the bosses of the UK’s seven biggest wholesale businesses called on the Competition and Markets Authority (CMA) to block the deal citing it “threatens the survival of the independent retailer”.
  3. The opposing wholesalers are Today’s Wholesale Services, Spar, Bestway, Bidfood, Landmark, Confex and Sugro.
  4. The consortium of seven has argued that they already had a market disadvantage against the 29 per cent grocery share of Tesco and this deal would further that divide.
  5. They have also alleged that after the deal, Booker would be able to take advantage of the supermarket’s wider purchasing power and buy its products at Tesco’s prices. With this price advantage, the wholesale group would then drive its competitors out of business.
  6. Tesco and Booker have defended their deal by stating that the wholesale market already benefits from competitive supply arrangements and their deal will provide better choice and lower prices for customers.
  7. Industry experts are also sceptical of the deal stating that the lower prices will only work for those who are supplied by Tesco and Booker.
  8. The deal is currently being investigated by CMA and the provisional findings are expected by the end of the month, and the final report is expected by the end of the year.
  9. Over the last one year, the shares in Booker have gone up by 21 per cent and closed at 205.3 pence yesterday despite its sales plummeting after fall in demand for tobacco.
  10. The £3.66bn worth Booker group supplies to the Budgens, Londis, Happy Shopper and Premier convenience chains, catering firms such as Wagamama and Carluccio’s, and also operates a cash and carry business, Makro.

 

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