Tesco-Booker to get ‘green light’ say investors

Leading investors believe the Tesco-Booker merger is to be cleared by the Competition and Markets Authority with only “minor remedies” if any.

Analysts from global financial services firm Credit Suisse told Proactiveinvestors that they believe there is a “95% chance that the deal will get the go-ahead,” stating that the CMA will give it a “tentative green light.”

The CMA website said it planned to list their preliminary findings of its investigation “in late October” but Retail Express has been informed that this is likely to be delayed by at least several weeks.

Credit Suisse’s view that only “minor remedies” (if any) will be required to see the deal passed would be the worst possible outcome for rival retailers. Sources from different retailers have previously told Retail Express that they expected a store sell-off as a condition for the deal passing, and that the opportunity to grab these represents a “silver lining.”

The regulator is exploring whether the deal harms competition in food retail, wholesale or supply, or degrades consumer choice. The results of the stage one investigation outlined concerns that Tesco or Booker could change its service in areas where the two businesses compete, such as where a Tesco Express and Londis are in close proximity.

While Credit Suisse told Proactiveinvestors that it is apparently optimistic that the Tesco-Booker deal will be good for Tesco shareholders, it said the scale of the deal could cause issues: “Integrating two expansive, complex operations while reorganising a large part of its store estate is more challenging than the issues faced (by Tesco) in other acquisitions.”

A revised timetable published by the CMA on November 1 says provisional findings will be published “Early to mid-November”, with remedies to any potential issues to be addressed by a final deadline of “Early December.” Though the final report is due to be published in mid to late December, retailers could have to wait until after Christmas, with the statutory release deadline being December 26.

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