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Tesco may have to close Express stores under Booker deal

RBR Staff Writer Published 04 April 2017

Tesco may have to shut down hundreds of its Express Stores to address competition concerns following its £3.7bn proposed takeover of food wholesaler operator Booker.

The development comes after rivals and competition authorities have hinted that Tesco would be at an unfair advantage in the British grocery segment should it go on with its acquisition of Booker,.

Booker is the biggest food wholesale company in the country, comprising of a variety of convenience store chains like Londis and Budgens.

Its takeover by Tesco is expected to transform the supermarket chain into an important supplier to small retailers. Reportedly, it is this possibility that has caused concerns about competition in the UK markets.

Adding to more concerns is the fact that Booker has a franchise model for its convenience store chains, which means that technically speaking, it’s not the owner of the stores.

The onus will now likely to be on Tesco as per the publication to divest a number of its smaller stores to justify that its acquisition would not impact competition.

So far things have not been smooth for Tesco towards its acquisition of Booker. Last month, two of its major shareholders opposed the proposed merger asking it to be called off completely.

Schroders and Artisan Partners, the two opposing shareholders having a combined £1.4bn worth of shares are reportedly not pleased with the amount of price quoted by Tesco to acquire Booker.

One of the partners even said that the retailer was repeating an ill-fated strategy of over-expansion that had failed in the 1990s.

Tesco has been keen on the Booker acquisition though stating that it would consolidate its main expertise of sourcing, distributing and selling food products in the UK. It also added that the merger with Booker would enable it to enter into the rapidly growing out-of-home food consumption segment.

Image: Tesco may have to divest several stores to close Booker deal. Photo: courtesy of Tescoplc.com.