Green prepares bid for Safeway
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Your support makes all the difference.The retail entrepreneur Philip Green is this week preparing to take the initiative in the six-way battle for control of the Safeway supermarket chain, by first obtaining informal clearance by the Office of Fair Trading and then putting the finishing touches to a cash bid of more than 300p a share or £3.2bn.
This would throw out the initial share-exchange offer from Bradford-based Wm Morrison Supermarkets, which has slumped in value to £2.5bn in line with the fall in the price of its own shares, and mark a new phase in the auction. Morrison is due to publish its formal bid documents next week, but Safeway has already withdrawn its recommendation of that offer in light of the number and quality of rivals who have declared their interest.
Sources close to Morrison indicated that the group was unlikely to be willing to raise its offer sufficiently to compete with Mr Green and likely subsequent bids from Sainsbury, Tesco, the American giant Wal-mart, which owns Asda, and the US financial bidder Kohlberg Kravis Roberts.
The Morrison strategy is understood to rely on discrediting the other contenders, either because the addition of Safeway would given them too much market share or, in Mr Green's case, because he may break up Safeway. This possibility is expected to be a major point of contention when Mr Green's representatives meet the OFT this week.
Mr Green's camp will also press the Morrison line that Sainsbury, Tesco, and Wal-mart should be ruled out on competition grounds. His advisers recognise that if he has to beat them on price alone, he will have to pay considerably more than £3.2bn.
Safeway shares closed at 326p on Friday, and the company has indicated it believes its assets could be worth nearly 400p a share.
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