Safeway's challenge to Morrison

By LUCY FARNDON
Updated:

 

SAFEWAY has thrown down the gauntlet to bidder Morrison by putting 53 of its stores on the market without waiting for their planned merger.

It has asked rival supermarkets chains to put in bids, which are likely to top £500m in total.

The move is designed to stop Morrison launching a low-ball offer for the whole of Safeway. All other big food retailers have been blocked from bidding, so many think Morrison has Safeway over a barrel.

By offering out the stores, Safeway chairman David Webster is trying to influence the price that Morrison pays. He wants to prove they are valuable and try to insist Morrison builds this into its bid price.

But Safeway's action is thought to have antagonised Sir Ken Morrison. Safeway must beware that it does not deter him from bidding.

Webster has asked for indicative offers but insists 'there is no intention of selling these stores until after completion' of the Morrison takeover.

Safeway wants to 'speed up the whole process' and give both companies 'a clear picture of the value of the stores ahead of agreeing the terms of the merger'.

Safeway had agreed a £2.9bn all-share merger with Morrison in January, but the bid lapsed after a regulatory inquiry.

The Competition Commission barred Tesco, Asda/Wal-Mart and Sainsbury from bidding, but cleared Morrison subject to the sale of 53 stores.

Most watched Money videos