WITH Tesco announcing their £3.7bn merger with wholesale food seller Booker in January, hedge funds and investment banks are now moving to take advantage of locational analysis to establish the financial impact of the merger.
The merger will result in Tesco’s share of the convenience store market increase to 28 per cent and, as with any intended merger of this size, the Competitive Markets Authority (CMA) is assessing the deal using geographic analysis.
The Mapmechanics consultancy team replicates the geographic analysis the CMA will carry out in advance, showing the business and trading landscape of both parties.
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They examine the locations of convenience stores owned by Tesco Group, Booker Group and the competition, and analyse their geographical makeup to produce statistics and insights that reveal the extent of competition in the convenience store market.
This is crucial information for hedge funds and investment banks worldwide, indicating the possible consolidation of retail estates after the CMA’s official decision.
The geographical strategy uses a straight line analysis (crow flies) to reveal that 63 per cent (2,192) of Tesco Convenience stores lie within a mile of a Booker store.
Alternatively, using the analytical approach of the Office of Fair Trading in the case of the Costcutter-Mace merger (drive-time catchments between outlets) Mapmechanics found that there are zero Tesco Convenience stores where a Booker store makes up the only competition within a five-minute drive.