Tesco and Booker bosses defend tie-up while Costcutter considers deal

 
Alys Key
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Tesco and Booker are awaiting the results of a CMA probe (Source: Getty)

The bosses of Tesco and Booker yesterday defended their proposed merger, as the impact of the £2.7bn deal continues to reverberate around the grocery industry.

In a joint letter to the Competition and Markets Authority (CMA), Tesco chief executive Dave Lewis and Booker CEO Charles Wilson said they had "absolutely no intention" to try and divert sales from one business to the other by deteriorating the offering in either Tesco or Booker.

Read more: Retail investors get bumper interest pay outs in £85m Tesco redress scheme

"Our merger represents a combination of two complementary businesses," they said. "We operate in distinct market sectors (wholesale and retail) and do not compete with each other."

The CMA is conducting an in-depth probe into the takeover, following concerns over the impact it could have on the convenience sector.

The deal has already had a knock-on effect in the rest of the industry, as supermarkets vye to control stores and supply chains.

Read more: B&M buys Heron Foods in push into convenience sector

Yesterday Costcutter, the UK's second largest convenience store chain, joined the fray. Sir Michael Bibby, managing director of Costcutter's owner Bibby Line, said in a letter to franchisees that the group had been "exploring all available opportunities" regarding a possible "collaboration".

It was not clear from Sir Michael's letter whether Costcutter aims to find a buyer or take over another group, or arrange a new supply deal as Morrisons did earlier this month with McColl's.

He said the exploration of other options was a direct response to the Tesco Booker deal.

Other movements in the sector include Nisa's potential sale to Sainsbury's which has been delayed while Sainsbury's awaits the results of the CMA's investigation, putting Co-op back in the picture as a potential buyer.

Read more: Lidl overtakes Waitrose to become seventh-largest supermarket in the UK

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