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Tesco plc (TSCDY) shares topped the FTSE 100 after Britain's antitrust regulator provisionally cleared a proposed merger with Booker, which will make it the biggest food company in the U.K. as food inflation grows.

Tesco shares surged 4.9%, changing hands at 185.5 pence each, their biggest rise since its proposed takeover of Booker Group plc (BOKGY) was announced in January.

The Competition and Markets Authority on Tuesday gave provisional clearance to the £3.6 billion ($4.7 billion) deal, saying it did not raise competition concerns in the retail and wholesale markets.

A panel of independent CMA members found that Tesco as a retailer and Booker as a wholesaler do not compete head-to-head in most of their activities.

"Our investigation has found that existing competition is sufficiently strong in both the wholesale and retail grocery sectors to ensure that the merger between Tesco and Booker will not lead to higher prices or a reduced service for supermarket and convenience shoppers," Chair of the CMA's Inquiry Group Simon Polito said in a statement.

Booker Group shares were marked 5.24% higher, changing hands at 209 pence, their highest rise since January.

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Tesco in January said it would pay the equivalent of 205.3 pence per Booker Group share, a premium of 12% to the closing price of 183.1 pence each the day before the deal was announced. Booker shareholders will receive 42.6 pence in cash and 0.86% in new Tesco shares and will own approximately 16% of the combined company when the deal is completed. The companies said the deal will create the U.K.'s "leading food business." Having a hand in the wholesaling will allow Tesco to keep pressure on margins as food inflation in the U.K. increases.

Clearance for the deal came on the same day, that data from Kantar Worldpanel showed food inflation was 3.4% for the 12 weeks ending Nov. 5.

In the 12 weeks, sales at Tesco, the U.K.'s No. 1 supermarket, grew by 2.3%, but its market share continues to be eroded by low-cost retailers, falling to 28% from 28.2% in the same time period last year.

Aldi saw shares grow by 13.1%, while fellow low-cost retailer saw sales surge 15.1% in the time period. Aldi currently stands as the U.K.'s No. 5 supermarket and Lidl holds the eight spot.

Sales at Walmart's (WMT) - Get Walmart Inc. Report Asda grew by 1.5%, the lowest growth of the so-called "Big Four" supermarkets, with market share falling from 15.3% from 15.5%.

"Asda has enjoyed its eighth consecutive period of growth - the longest run of sales increases the retailer has seen since March 2014," Kantar Worldpanel Head of Retail and Consumer Insight Fraser McKevitt said in a statement. "Both cheaper and more premium own label lines delivered an impressive performance to help increase overall sales by 1.5% year on year. Asda's budget Farm Stores range grew by 88%, while sales of its Extra Special line were up 22%."

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