UK – Tesco plc, the British multinational retailer in grocery has completed a US$5.5 billion takeover of Booker Group, UK’s largest food wholesale operator, offering branded and private-label goods.
The acquisition which received court approval combines Tesco and Booker into a conglomerate that is set to explore Britain’s billion-dollar food market.
Tesco proposed to acquire Booker, a deal which would see it take over hundreds of its convenience stores that compete with Tesco’s small format shops and restaurant chains.
Booker shares have now been de-listed from the London Stock Exchange, for each Booker share Tesco offered 0.861 new Tesco shares and 42.6p in cash, a Telegraph report said.
In December 2017, the takeover bid was given a go ahead by the UK’s Competition and Markets Authority (CMA) which announced that the takeover prompted no competition concerns.
The clearance was granted despite concerns that the deal gives Tesco a greater market grip, while some analysts argued that the companies could be forced to relinquish some stores as part of the deal.
Dave Lewis, Tesco’s chief executive, said the deal would create the UK’s leading food business.
“Tesco has made significant progress in turning around our UK retail business,” he said.
“Wherever food is prepared and eaten — ‘in home’ or ‘out of home’ — we will meet this opportunity with the widest choice and best service available.”
CMA said that although Booker supplied shops such as Londis, Budgens, Premier and Happy Shopper which competed against Tesco, it did not own them and despite the move, the wholesale market will still remain competitive
“So although these shops compete with Tesco, Booker cannot directly determine how they compete”, the authority said.
According to CMA, Booker accounts for between 10pc and 20pc of the grocery wholesale market and 18pc of the retail market while Tesco accounts for 28pc of the grocery retail market.
Following the deal, the wholesale industry has been caught in a wave of completion just to stay afloat in the UK grocery market.
Morrisons, food and drink retailer sealed a wholesale contract with McColls and The Co-op swooping for convenience chain Nisa to place itself at an advantageous competitive edge