One of the UK’s biggest wholesalers has warned that the proposed Tesco-Booker merger could make rival wholesaler Palmer & Harvery go bust.
Tesco currently makes up around 40 per cent of Palmer & Harvey‘s revenues, and Bestway has warned that should the grocery giant merge with Booker, Palmer & Harvey (P&H) “would no longer be able to compete”.
The Competition and Markets Authority (CMA), which is in the process of investigating the proposed merger worth £3.7 billion, is being urged to also investigate the impact it would have on the wider wholesale market.
“Given the reliance of P&H on Tesco and its current (and well-documented) poor financial state, even a small reduction in volume would fundamentally impact P&H‘s viability as a going concern,” Bestway wrote in a submission to the CMA.
P&H is currently seeking a buyer, with the Telegraph reporting that private-equity firm Carlyle and Brookfield Business Partners was now in takeover talks with the wholesaler.
There is also speculation that Tesco’s main Sainsbury’s rumoured could be linked to a bid.
Tesco and P&H recently penned a new three-year supply deal in April, and analysts have said a CMA approval of the Booker merger could be approved if Tesco remained committed to the partnership with P&H.
“It is too early to comment on what the findings of the CMA‘s review will be. We look forward to continuing our engagement with the CMA over the coming months,” a Tesco spokesman said.
“We remain convinced that the merger will bring benefits for independent retailers, caterers, small businesses, suppliers, consumers, and colleagues.”