Tesco is planning to buy Booker Group, the owner of Budgens and Londis, for £3.7 billion.
John Colley, a Professor of Practice at Warwick Business School and an expert on mega mergers, released the following comment:
"Tesco CEO Dave Lewis clearly believes the job is done at Tesco and it's time to chase growth by diversifying into the restaurant market. This comes shortly after disposing of the Giraffe group of restaurants.
"The acquisition also increases their position in convenience stores and the distribution which goes with it. Undoubtedly the Competition and Markets Authority will have a good look and may well require disposals. That could be a protracted affair which will be a significant distraction for both businesses.
"Richard Cousins, CEO of Compass, appears to have departed the Tesco board as a consequence of this deal. Compass has 'stuck to what it knows' very successfully and shunned diversification as their shareholders will agree.
"Tesco seems to be chasing distractions before the job is finished in the supermarket grocery business. The UK supermarket industry is likely to remain highly competitive for a long time to come.
"Aldi and Lidl will not be changing their strategies which means that the super profits the industry was achieving are gone for good. Tesco, with 28 percent of the grocery market, is everyone's target. Dave Lewis would do well to focus on continuing the recovery at Tesco."