The ever-widening bidding battle for Safeway could be just the start of a busy year of retail mergers and acquisitions, according to retail market analysts M+M Planet Retail.
Consolidation in international grocery retailing progressed steadily in 2002, according to M+M, with over 180 identified deals seeing nearly 23,500 stores change hands - accounting for estimated total retail sales of around €84 billion.
But this figure looks set to be eclipsed in 2003, with Safeway's €20 billion of sales already the subject of a highly competitive takeover battle in the UK. The move will follow last year's merger between the United and Yorkshire Co-operatives and Tesco's takeover of convenience store operator T&S to further intensify concentration in the UK market, the research group said.
On a regional basis, the busiest market in 2002 was Europe (accounting for 52.7 per cent of grocery M&A in retail sales terms), followed by Asia-Pacific (30.0 per cent), North America (15.0 per cent), Latin America (2.1 per cent) and Middle East & Africa (0.2 per cent).
M+M highlighted what it claimed were the most important deals during the year, including French retailer Casino taking a controlling interest in beleaguered Dutch operator Laurus, a move which helped spur the latter group on to restructure the rest of its ailing business; another French retailer Auchan tightening its grip on La Rinascente in Italy; and the opportunistic acquisition by Iceland's Baugur group of a stake in the UK's Big Food Group (operator, ironically, of the Iceland chain).
Outside Europe, the major deals in North America included the takeover of troubled convenience store operator Dairy Mart by aggressive Canadian rival Couche-Tard, while in Asia, the ever-expanding Wal-Mart empire increased its control over Japanese operator Seiyu.
M+M gave no indication of where the likely retail M&A activity was likely to be this year, but with many major players getting their fingers severely burned through their acquisitions in Latin America in recent times, European groups may look closer to home to expand their business.
In the UK, we may still see more activity in the convenience store sector, though nothing is likely to grab the headlines as much as Safeway, while Laurus in the Netherlands may yet decide to sell off more operations to complete its streamlining. Even Dutch market leader Ahold has said it will sell off non-core businesses this year.
But perhaps central and eastern Europe will be the major battlefield this year, with many western companies already well established there and looking to increase their foothold in advance of the accession of 10 new members to the EU in 2004.
Whether expansion here would involve mergers or takeovers is unclear - since most companies have opted for store construction in countries where planning permission is often not hard to get and where in any case there are few established retail groups to acquire - but there is likely to be some not insignificant activity there this year.
As for Asia, that is also likely to remain an important market this year, despite difficult economic conditions there. Tesco, Carrefour and Ahold are among the major operators in that region, and all three have a history of snapping up local rivals.