-Caveat Lector- Euphorian spotted this on the Guardian Unlimited site and thought you should see it.
To see this story with its related links on the Guardian Unlimited site, go to http://www.guardian.co.uk Supermarket giants to target Safeway with rival £3bn bids Neil Hume Sunday January 12 2003 The Observer A fierce battle for control of Safeway will spill out into the open this week with J Sainsbury and Wal-Mart, the US owner of Asda, both expected to bid over £3bn to acquire Britain's fourth-largest supermarket chain. Safeway was effectively put up for sale by its management last week when it agreed to be taken over by Wm Morrison, the Yorkshire-based grocery chain run by Sir Ken Morrison, in a deal worth £2.65bn. However, Morrison's share price dropped sharply after the deal was announced, leaving it vulnerable to a counter bid from rivals who cannot afford to see the two chains combine. Sainsbury fears that it will be left as the weakest of the four players in the cut-throat UK food retailing market if the deal goes ahead, while Wal-Mart will never achieve its ambition to become the No1 in Britain if it lets Safeway fall through its grip again - the two were just hours from agreeing a deal four years ago. Sainsbury's directors held day-long discussions yesterday with the chief executive, Sir Peter Davis, seeking support for a cash and share offer of more than 300p for each Safeway share. At the end of Friday's trading, Safeway shares closed at 279.75p, while the value of Morrison's offer stood at 251p. An offer from Sainsbury could come as early as today, alongside the company's third-quarter results, which will the give the City the first indication of how Sainsbury traded over Christmas. Wal-Mart, the world's biggest retailer, is expected to wait until Sainsbury has shown its hands before announcing its move. Given its size the Arkansas-based company will easily be able to outbid Sainsbury and is likely to offer cash. City analysts believe it could afford to pay up to 400p. The bids from Sainsbury and Wal-Mart will be conditional on regulatory approval. This is because their announcement will trigger an assessment by the office of fair trading and probably a referral to the competition commission, which will then launch an inquiry into whether either company should be able to buy Safeway. This process could take up to six months and its findings can, in theory, be overruled by the trade and industry secretary, Patricia Hewitt. A combination of Sainsbury and Safeway would create a food retailing giant in the UK with a market share of 27%, while a merged Asda and Safeway would control 26%. Either deal would reinforce the dominance of the big three - the Tesco, the market leader, Asda and Sainsbury. Critics claim this would stifle competition. To overcome such objections both Sainsbury and Wal-Mart are prepared to sell up to one-third of Safeway's 479 stores. Ironically, the two companies held talks about a carve up of the Safeway store portfolio late last year, but the discussions broke down last month after Wal-Mart objected to the terms of the deal. Sainsbury is now talking to the US private equity group Kohlberg Kravis Roberts and the Royal Bank of Scotland. However, there were indications from Whitehall yesterday that the government would block the Sainsbury and Wal-Mart bids even if both companies promised to sell large of numbers of stores. This would play into the hands of Morrison, which claims that its deal will create a fourth power in the UK food retailing market. The company will make its submission to the OFT this week and is confident it will not be referred to the competition commission. Morrison needs to buy Safeway so that it can expand out of its northern heartland. At the moment only eight of its 191 stores are south of Northampton. Copyright Guardian Newspapers Limited <A HREF="http://www.ctrl.org/";>www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance—not soap-boxing—please! These are sordid matters and 'conspiracy theory'—with its many half-truths, mis- directions and outright frauds—is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRLgives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. CTRL gives no credence to Holocaust denial and nazi's need not apply. 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