UK wholesaler Booker Group PLC (LON:BOK) said the competition watchdog’s review of its £3.7bn takeover by Tesco PLC (LON:TSCO) is “progressing” as it reported growth in second quarter sales.
Like-for-like sales in the 12 weeks to 8 September rose 1.3%, boosted by a strong performance in catering and retail supply.
Non- tobacco sales increased 6% on a like-for-like basis while tobacco sales dropped 9.4%, reflecting the negative impact of changes in tobacco legislation.
Group sales, including its Budgens and Londis stores, edged up 1.1%.
“Our plans to focus, drive and broaden Booker Group are on track,” said chief executive Charles Wilson.
“We continue to help our retail, catering and small business customers prosper through improving our choice, prices and service."
READ: Booker shares gain after reporting first quarter sales growth amid Tesco takeover probe
Booker said the Competition and Markets Authority (CMA) is continuing to review its planned merger with Tesco and will not be making forward looking statements for the duration of the offer period as required in the Takeover Code.
READ: Tesco's proposed Booker takeover to undergo in-depth competition investigation
The CMA referred Tesco’s bid for Booker for an in-depth investigation in July to assess whether the deal could reduce chose for shoppers and for Booker’s small stores.
Shares climbed 0.85% to 199.80p in morning trading.
Shore Capital cautious on Booker as CMA reviews Tesco deal
Shore Capital left its rating on Booker at 'sell' with a 198p target price, highlighting concerns about the CMA rejecting its planned Tesco merger.
"We see limited near-term upside for Booker shareholders from the Tesco tie-up, it is very much a medium to long term proposition," according to Shore Capital analysts Clive Black and Darren Shirley.
"The outcome is also much more about what Tesco can deliver since Booker in itself does not transform Tesco group’s prospects; current financial outcomes from a high priced deal are not yet compelling, maybe this will change? As such if the CMA were to put the kybosh on the proposed merger, we see considerable downside for Booker and hence our cautious stance."