Supermarket giant Tesco is poised to acquire Booker, a food wholesaler.
The proposed deal has helped shares in the supermarket surge.
Investment bank UBS believes the deal will give Tesco a major advantage on price, and will help increase its profit margins. It’ll also give the retailer access to a wider range of fresh food.
The industry isn’t happy
Both companies insist that the acquisition will not hurt their customers. Instead they should look forward to lower prices and greater efficiencies – whatever that means?
But it hasn’t stopped Booker convenience store customers Premier, Londis and Budgens getting concerned about the deal. They’re particularly worried that the combined group will limit products or ranges to them, whilst stocking Tesco stores with consumer favourites.
And that’s something that the Competition and Markets Authority (CMA), the UK’s competition regulator, is set to report on. The deal needs its approval to proceed.
Food firms are deal hungry
The deal has made other food retailers hungry: both Sainsbury’s and Co-op are interested in buying Nisa, a convenience store chain. And the second biggest small shop chain, Costcutter, is on manoeuvres.
Are Tesco’s bad times finally over?
All of this comes after a troubling period for Tesco.
Once seen as a darling of industry, a fraud investigation led to senior executives at the firm being charged with inflating profits in 2014. It’s also suffered, along with the rest of the Big 4, from budget rivals Aldi and Lidl.