Morrisons bid 'in Safeway's best interests'

Only Morrisons will be able to guarantee a better deal for Safeway's customers and shareholders, according to the Yorkshire group's chairman, Sir Kenneth Morrison.

Commenting on yesterday's announcement​ by UK market leader Tesco that it was to join the bidding game for Safeway, Morrison said that the bid had been expected.

"It does not surprise me that Tesco is joining Wal-Mart/Asda and Sainsbury's in pursuit of Safeway. It further reinforces our view that the combination of Morrisons with Safeway will create a highly effective competitor for the big three national food retailers which they are all busy attempting to thwart.​

"Tesco suggests that a reduction from four to three national food retailers is consistent with promoting competition and consumer choice. Tesco and Safeway together would dominate the UK food retailing market with a share of approximately 44 per cent in one-stop food shopping.​

"The combination of Safeway and Morrisons will create a fourth strong national food retailer. A takeover of Safeway by Tesco, Sainsbury or Asda would eliminate a competitor, concentrate their purchasing power still further, and could create an anti-competitive and unhealthy market place with less choice and potentially higher prices,"​ he said.

But other retailers are not the only expected bidders for Safeway. "A financial buyer of Safeway is likely to lead to a break up, either now or later, leaving just three big food retailers. The alternative of maintaining Safeway on its own will not provide customers, suppliers or investors with the benefits of scale that our merger will bring,"​ Morrison noted.

He also pointed out that despite all the activity, his company was still the only one to have made an actual bid for Safeway. "The only offer actually on the table is from Morrisons and it is in the best interests of Safeway's customers, suppliers, employees and shareholders. We have a deliverable offer which we will continue to pursue vigorously."​

The potential bids for Safeway from Tesco, Sainsbury's and Asda are all being assessed by the Office of Fair Trading, but all are likely to involve the sale of a large number of Safeway stores and, as Morrison sees it, a reduction in competition in a market where there is very little room for consolidation.

Morrisons' bid is still the only one to have been recommended by Safeway, and must still be regarded as the most likely to succeed, if only because it is unlikely to require the sale of any Safeway stores.

But news from the Daily Mail​ today suggests that yet another bidder could be about to emerge - Marks & Spencer. The clothing and food retailer could be preparing a full bid for Safeway, the paper said, but it is thought more likely to 'mop up' any stores sold off by one of the larger groups if they win the battle for the retailer.

M&S is currently expanding the number of 'food-only' stores it operates across the UK, and the addition of even a handful of Safeway stores would give it a major boost in this direction. Such a bid would also be unlikely to fall foul of the competition authorities.