UK: Tesco joins battle for Safeway
The UK's number one supermarket chain Tesco has confirmed its interest in launching a bid for rival Safeway, making it the sixth company to join the takeover battle.
Tesco said it was considering an offer of a mix of cash and shares that would be "compelling" for Safeway's shareholders.
Due to Tesco's large market share of 27%, the move is likely to face scrutiny from competition regulators. But Tesco chief executive Terry Leahy believes Tesco could keep 75% of Safeway's 480 stores and still avoid any local monopoly.
"It's not a spoiling tactic, it is a serious move," Tesco Chief Executive Terry Leahy told Reuters in an interview.
Leahy said he considered it unlikely that regulators would allow Wal-Mart or Sainsbury to takeover Safeway completely, and if the chain was to be broken up, Tesco wanted to be in on the action.
"The Competition Commission said it wants vigorous competition between the four national players to continue, so we don't think there will be a consolidation of four into three," Leahy said. "But the fact that these bids have been made require the authorities to consider a break-up of Safeway by the big three and in that scenario our case is just as good."
"You can discern the difference between the Morrison bid and the others," Leahy told Reuters. "It those other bids are considered so must ours, because our case is just as strong. There are lots of places where there is no Tesco store."
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