Shares in Tesco (LON:TSCO) have jumped nearly five percent in London this morning, as Britain’s competition watchdog cleared provisionally the grocer’s tie-up with wholesaler Booker Group (LON:BOK). The move comes ahead of the Competition and Markets Authority’s (CMA) final report due by the end of the year.
As of 09:28 GMT, Tesco’s share price had added 4.55 percent to 185.05p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.12 percent higher at 7,423.98 points. Booker’s share price meanwhile is 4.93 percent up at 208.40p.
CMA greenlights tie-up
The CMA said in a statement this morning that it had provisionally found that Tesco’s anticipated acquisition of Booker “may not be expected to result in a substantial lessening of competition within any market or markets for goods or services in the United Kingdom”.
Today’s statement comes after the watchdog recently delayed the findings of its five-month long investigation into the tie-up. The CMA was previously expected to recommend that disposals might be needed to alleviate competition concerns.
“Our investigation has found that existing competition is sufficiently strong in both the wholesale and retail grocery sectors to ensure that the merger between Tesco and Booker will not lead to higher prices or a reduced service for supermarket and convenience shoppers,” Simon Polito, Chair of the CMA inquiry group, commented in the statement.
The Times quoted analysts at Bernstein as saying that the CMA’s provisional approval was a positive catalyst for Tesco’s share price as it reduced uncertainty over this deal.
The blue-chip grocer welcomed the decision in a statement, noting that it would continue to work with the watchdog as it prepares its final report due by the end of the year. Tesco now expects the merger to complete early next year.