Tesco booker merge

Houmousgate aside, it’s been a quiet news week. Not sure why. Possibly the election. Or the bank holiday. Or maybe the sheer surfeit of news in recent months, as if the industry is finally digesting it all.

It certainly doesn’t help that the biggest story of all right now - the Tesco-Booker deal - has gone so quiet. With the Competition & Markets Authority still not announcing the timeline for its investigation, there’s a bit of a news vacuum. After a flurry of reporting around shareholder and rival reaction, plus some speculative attempts at predicting the CMA’s likely approach, pickings have been slim.

At the same time, as we report, the deal has genuinely flummoxed the market. Not just in terms of how the CMA is likely to interpret it, but whether it adds value and where, and who the winners and losers might be.

That’s certainly the case in the independent grocery retail trade, as two surveys we report on show. Not surprisingly there is antipathy towards the deal among independents and rival symbol retailers, though it’s by no means universally viewed among them as the end of the world, whatever rival wholesalers like to think.

But it’s the uncertainty among Booker retailers that is most notable. On the one hand, the fact so many can’t make up their mind shows Booker’s charm offensive isn’t entirely working. On the other hand, uncertainty is inevitable given not only the unprecedented nature of the deal but all the variables involved.

It’s not just whether Tesco-Booker will improve margins for its independent retailers (it seems unthinkable and Booker has proved as good as its word since the Musgrave deal). It’s how the deal would affect Tesco’s expansion plans, for example: is it worth it for Tesco to cannibalise sales from customers? And while Booker has promised to make it easy for retailers to walk away if they want, what happens to the 60 or so Budgens stores for whom the head lease is owned by Booker? If it were owned by Tesco, and they wanted to cash in, would a big four rival want to buy the site from Tesco? Perhaps some clarity and focus needs to come not from the CMA but from Tesco and Booker.

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