Tesco’s proposed acquisition of Booker could put the latter’s ailing wholesale rival Palmer & Harvey out of business, Bestway has warned.
Tesco currently accounts for 40% of Palmer & Harvey’s revenues, but the Competition and Markets Authority, which is investigating the £3.7bn deal, is under pressure to analyse the impact it would have on the wider wholesale market.
Wholesaler Bestway has warned that, should Tesco shift its business to Booker, Palmer & Harvey “would no longer be able to compete”.
In a submission to the CMA, Bestway added: “Given the reliance of P&H on Tesco and its current (and well-documented) poor financial state, even a small reduction in volume would fundamentally impact P&H’s viability as a going concern.”
Embattled Palmer & Harvey is currently seeking a buyer – and Tesco’s big four rival Sainsbury’s has previously been linked with a bid.
The wholesaler is now in takeover talks with private-equity firm Carlyle and Brookfield Business Partners, according to The Telegraph, but Palmer & Harvey’s contract with Tesco could prove pivotal to any deal going ahead.
The two businesses only agreed a new three-year supply deal in April and analysts have suggested Tesco could commit to the partnership for longer in order to secure CMA approval.
A Tesco spokesman said: “It is too early to comment on what the findings of the CMA’s review will be. We look forward to continuing our engagement with the CMA over the coming months.
“We remain convinced that the merger will bring benefits for independent retailers, caterers, small businesses, suppliers, consumers, and colleagues.”