Following the ruling by the Department of Trade and Industry last week that cleared the way for Yorkshire-based supermarket chain Morrisons to bid for larger rival Safeway, speculation and rumours regarding the future of the UK supermarket sector remained rife over the weekend.
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While an industry source told Reuters that Safeway had not decided what price to ask from Morrisons for the takeover, the Sunday Times reported that Safeway would ask its suitor to pay £3.5bn (US$5.8bn), compared to the retailer’s now-lapsed initial January offer of £2.9bn.
Meanwhile Sainsbury’s, one of three retailers to be blocked by the DTI’s ruling, is reportedly planning to ask for clarification of the ruling that Sainsbury’s, Tesco and Wal-Mart’s Asda can only bid for the 53 Safeway stores that Morrisons will have to sell if buys the chain, reported the Guardian.
The decision by the DTI to limit the number of stores that are allowed to be sold to the country’s three largest retailers will cause difficulties for any financial bidder for Safeway, because any plan to buy the chain and break it up would depend on the buyer being able to sell large numbers of stores off to the larger retailers.
Rumours also circulated that retail entrepreneur Philip Green, whose interest in Safeway is believed by some to have waned, may now consider a bid for Sainsbury’s, the UK’s third-largest supermarket chain.
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By GlobalData“I am still studying the Safeway report, “Green was quoted by the Guardian as saying, adding that he had “no comment to make”.
Meanwhile, UK food and clothing retailer Marks & Spencer hinted that it may be interested in acquiring some of the 53 stores that Morrisons would have to sell off if it buys Safeway. While not specifically mentioning Safeway, an M&S spokeswoman said the company is “always interested” in sites that would enable it to expand its food retail business, reported Dow Jones International News.
