A shock deal has been announced between company booker and supermarket Tesco’s One Stop convenience chain.
The deal which was made in late January this year has been sealed for a huge £3.9bn and was explained by executives as a way to “unlock growth in the UK food industry” it is also to be a response for rapid changes happening in consumer behaviour.
Following the news of the deal, concerns have grown for the supermarket by retail observers and is fear the competition will increase.
Tesco boss Dave Lewis however has chosen to see the benefits rather than the disadvantages, by highlighting that Booker operates a franchise model for its Londis, Premier, Budgens and Happy Shopper retail chains so the business would not be adding “more stores”.
Legal sources have explained that the Competition and Markets Authority (CMA) is not very likely to look at the market as simply as property ownership. They will prefer to examine the levels of influence across the retail supply chain, in particular the pricing decisions and store promotions.
Booker supplies 5,463 franchise convenience stores while Tesco owns 3,569 shops including 2,839 small stores and over 700 One Stop shops.
It is expected that the deal will not seal until the end of the as the CMA was to examine competition levels and concerns from other retailers. In 2014 regulatory interference delayed Poundland’s takeover of rival 99p Stores by six months before clearing the deal without concessions.
Tesco and Booker have enlisted top antitrust lawyers at Freshfield, Clifford Chance and regulatory consultants at Frontier Economics since late June – when the two sides were code-named Teal and Blue – to help navigate it through the regulator.
Industry sources said Tesco’s One Stop chain, which it bought in 2003, will be closely examined as it is fully owned by the supermarket group and could be viewed as competing directly with Booker’s retail franchises.
