Tesco PLC (LON:TSCO) has asked competition regulators to speed up their investigation into its proposed £3.7bn takeover of wholesaler Booker Group PLC (LON:BOK).
The Competition and Markets Authority is currently in the middle of a phase one investigation which looks at the effects on market competition if the two retailers merge as planned.
That process last for six weeks or so and isn’t due to finish until 25 July, but the CMA has received a request from Tesco and Booker to fast-track the investigation to a more in-depth phase two enquiry.
Under this ‘fast-track referral’ procedure, which was also used in BT Group plc’s (LON:BT.A) merger with EE, the CMA’s investigation timetable is generally much shorter.
“We expect the CMA to issue an early decision to refer to Phase 2 within the next two weeks,” said Tesco in a statement this morning.
The CMA must launch a full inquiry if it identifies a “potential reduction in competition” during the first phase of its inquiry.
Given that various suppliers have expressed unease at the deal, there was always a chance that the regulator would eventually move to a full investigation anyway.
Should the CMA go ahead and approve the fast-track request, the phase two process would be expected to last for around 24 weeks, meaning there would be no decision until early next year.
Controversial acquisition
Ever since Tesco first unveiled plans to acquire Booker at the start of the year, investors have been split as to whether or not the deal makes sense.
Several investors, including Schroders and Artisan Partners, have expressed concerns that the acquisition is too expensive and are also wary that it might derail the company’s recent improvements.
In fact, both of those shareholders, which own a combined 9% of Tesco, wrote to chairman John Allan asking him to pull out of the deal.
For its part, the supermarket wants to tighten its grip on the near-£200bn UK food market and repeated today that it intends to acquire Booker in order “to enable access to [a] larger, faster-growing market opportunity”.
Tesco has previously said it is “very confident” it can realise £175mln of synergies, mainly through product and distribution, as well an extra £25mln in growth.
Tesco shares opened 0.25% higher at 72.15p on Thursday.
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