THE RETAIL BULLETIN - The home of retail news
HOME
RETAIL NEWS
RETAIL EVENTS
Fashion
Department Stores
Shopping Centres & Retail Parks
Home & DIY
Electricals
Health & Beauty
General Merchandise
Entertainment
Sports & Leisure
The Papers
Retail Solutions
Food & Drink
Interviews
Property
RETAIL INSIGHTS
RETAIL SOLUTIONS
ABOUT US
CONTACT US
SUBSCRIBE FOR FREE
Morrisons cleared for Safeway bid
Safeway: Morrisons cleared to bid

Rivals blocked as Hewitt orders 53 store sell-offs September 26 2003 Morrisons has been given the green light to bid for Safeway, while rivals Tesco, Asda and Sainsbury’s have had their potential bids blocked on competition grounds.

GENERAL MERCHANDISE

Morrisons cleared for Safeway bid

Rivals blocked as Hewitt orders 53 store sell-offs September 26 2003 Morrisons has been given the green light to bid for Safeway, while rivals Tesco, Asda and Sainsbury’s have had their potential bids blocked on competition grounds.

In a widely expected ruling, trade and industry secretary Patricia Hewitt said Morrisons would have to sell 53 stores, either from Safeway’s total of 480 or its own stores, in areas where the overlap with existing Morrisons stores would reduce local competition significantly. Forty-eight of the Safeway outlets are larger supermarkets, while the remainder are smaller stores.

Any of the

'big three' whose main bids are blocked would be allowed to acquire some of these stores, depending on crossover of catchment area with existing stores. Other operators including the Co-op, Waitrose and Marks & Spencer are also likely to take a look at the stores going on the market.

Hewitt said: "I have considered carefully the CC's report and agree with their conclusions that an acquisition of Safeway by Asda, Sainsbury's or Tesco may be expected to operate against the public interest at both a local and national level. A number of adverse effects were identified by the CC including an increase in prices over time, stemming from a reduction in the number of national supermarket operators from four to three.

"I have accepted their advice that no reasonable package of divestments would remedy the national competition concerns raised in these cases.

"I also agree with the CC's conclusions that the proposed acquisition of Safeway by Morrisons may be expected to operate against the public interest, but that store divestments where local competition concerns arise are sufficient to remedy the adverse effects identified."'

The commission undertook a detailed analysis of local markets in order to identify areas where local competition issues arose and divestment would be necessary, using a criteria of a reduction to three or fewer supermarket operators in one locality.

Competition Commission chairman Sir Derek Morris said: "I am pleased that our report and recommendations have been accepted in full. If Morrisons are successful with their bid for Safeway we would expect them to become a strong national player.

"They should exert a positive competitive effect on the grocery retail sector, and benefit shoppers."

Morrison triggered the investigation when it launched a recommended £2.9bn all-share offer for Safeway in January. That bid has now lapsed, and Morrisons has indicated that it may consider reducing the offer in light of poorer sales at Safeway this year.

However, Bhs and Arcadia owner Philip Green is clear to bid at any time, and has been waiting for the ruling before deciding on his next move. An all cash offer from Green might appeal to Safeway shareholders, and could force Morrisons to increase its offer or sweeten it with cash. There could also be renewed interest from private equity bidders hoping to asset strip Safeway, although the report has been couched in terms that would make it harder to sell stores on to the big players.

Safeway issued a statement saying it would study the report and make any further anouncements as appropriate. The company said "it has great confidence in the intrinsic strengths of Safeway's business and the value of its predominantly freehold property portfolio."

Email this article to a friend

You need to be logged in to use this feature.

Please log in here

Subscribe For Retail News

RETAIL EVENTS

Customer Engagement Conference 2019
Customer Engagement Conference 2019
5 June 2019
Cavendish Conference Centre, London W1
The 10th Annual Retail Customer Engagement Conference
The HR Summit 2019
The HR Summit 2019
8 October 2019
Hallam Conference Centre, London W1W 6JJ
The 11th HR Summit 2019, Hallam Conference Centre, 44 Hallam St, Marylebone, London W1W 6JJ
AI in Retail Conference 2019
AI in Retail Conference 2019
16 October 2019
Cavendish Conference Center, London W1G 9DT
Digitally native competitors and demanding customers are forcing a new perspective in retail. AI and machine learning can help you step up to the challenges; and some ‘small and beautiful’ solutions can increase your conversion rates within just a few weeks.
Omnichannel Futures Conference 2020
Omnichannel Futures Conference 2020
5 February 2020
Cavendish Conference Centre, London WG1 9DT
A truly omnichannel offering requires an understanding of customer behaviour across all shopping channels and how this should impact your overall business strategy