LONDON British wholesaler Booker (BOK.L) still expects its 3.7 billion pound ($4.8 billion) takeover by Tesco (TSCO.L) to be completed by early 2018 at the latest, it said after reporting annual results on Thursday, despite regulatory hurdles that analysts said could make the timetable optimistic.
Though the companies announced the deal in January, Britain's Competition & Markets Authority (CMA) has yet to formally confirm the start of its initial appraisal of the plan and most analysts see referral to an in-depth Phase 2 investigation as inevitable.
That latter could last up to 24 weeks, with the CMA able to seek remedies or block the deal if it finds that the takeover would reduce competition.
The CMA is not known for moving quickly and analysts pointed to the regulator's handling of sportswear company JD Sports' (JD.L) proposed takeover of the Go Outdoors chain. That deal, which would create only a few overlaps among stores, was announced in November, but it took until Thursday for the CMA to say it will not be conducting a Phase 2 investigation.
"If the CMA took this long to clear that deal, how long will it take to investigate the far more complex Booker-Tesco merger?" said independent retail analyst Nick Bubb.
Meanwhile, Booker and Britain's biggest retailer remain committed to their deal despite some dissent among Tesco shareholders.
"We are continuing to assist the UK competition authorities in their ongoing consideration of the merger and it is expected that the merger will complete in late 2017/early 2018, subject to, amongst other things, the necessary shareholder approvals," Booker said.
Booker, which supplies convenience chains including Budgens and Londis, restaurants such as Wagamama and Carluccio's and also operates the Makro cash and carry business, reported a 15 percent rise in annual profit and said revenue in the first seven weeks of its new financial year was ahead of the same period last year.
It made a pretax profit of 174 million pounds in the year to March 24, slightly ahead of analysts' average forecast of 173.3 million pounds, reflecting progress across the catering and retail supply sides of the business.
Booker's total return to shareholders, made up of ordinary and special dividends, was increased by 11 percent to 8.62 pence.
Shares in Booker, up 23 percent this year, were flat at 199 pence at 0838 GMT (4.38 a.m. ET).
Tesco's cash and shares offer valued Booker shares at 200 pence.
(Editing by Kate Holton and David Goodman)