Tesco boss Dave Lewis has shrugged off suggestions that competition authorities could hamper its proposed merger with food wholesaler Booker.
The supermarket giant revealed a surprise £3.7bn deal to join forces with the Londis and Budgens owner this morning, but analysts believed the Competition and Markets Authority (CMA) would launch a probe into the deal.
Independent analyst Nick Bubb said the CMA “will have a field day” and take “a good look at the overlap” between Tesco’s One Stop franchise business and Booker’s stable of symbol group fascias, which includes Premier and Family Shopper.
Shore Capital analyst Clive Black added that “Christmas has come very early” for the watchdog and warned “it could be a very messy process” if Booker’s wholesale rivals lodge complaints.
But Lewis, who said the deal would create “the UK’s leading food business,” said he was confident the deal would be rubber-stamped by regulators because Tesco was not acquiring convenience stores as part of the transaction.
Although Booker owns the Londis, Budgens and Premier symbol groups and supplies just under 5,000 independent retailers trading under those fascias – plus around 115,000 other c-stores – it only directly operates nine convenience shops.
A ‘better deal’ for independent retailers
Lewis said: “Obviously the deal will have go through all of the clearance, but the thing to note is that this is a retailer and a wholesaler coming together.
“This is not an acquisition of stores, which is where I think most of the questions will come from.
“What Booker has been fantastic at doing is serving independent retailers very well indeed.
“What we think will happen is that, by coming together, we will be able to build further on that offer and that, actually, independent retailers will get a better deal.”
Booker boss Charles Wilson insisted the deal was “pro-competition” and said the companies had “a very compelling story” to tell in order to complete the deal.
Wilson added: “What the Budgens customers are saying to me is: ‘Charles, you’ve made major progress in the past 18 months since we’ve owned the business.’ They’ve seen better choice, better price, better service and they are making more money than they’ve ever made.
“I’ll be saying to them: ‘With Tesco, we can give you more of that better choice, better price, better service and you’ll make more money going forwards.”