And then there were five…
five with the withdrawal yesterday of the US investment group KKR.
The remaining candidates, all of them retail specialists, now await
a decision from the regulators as to whether their bids can
proceed.
The six-horse race to take over the UK supermarket chain Safeway has been reduced to five, with the announcement yesterday that the investment firm Kohlberg Kravis Roberts (KKR) has decided not to bid.
In a statement, KKR said that it had "undertaken significant due diligence with the co-operation of the company [Safeway] and its advisors" and that it had decided "for the time being not to progress its potential offer for Safeway any further, but will continue to monitor the situation and keep its position under review".
In response, Safeway said simply that it had noted KKR's decision to withdraw, and that it would make further announcements as and when appropriate.
The decision of the US company not to bid for Safeway means that all the potential buyers are retailers - although entrepreneur Philip Green, head of BHS, is not specifically a food retail specialist - and they will be awaiting with impatience the decision of the Office of Fair Trading, which is considering whether to refer their bids to the Competition Commission.
KKR was one of the companies least likely to have concerned the OFT - along with Green and Morrisons, which is smaller than Safeway - but Tesco, Sainsbury and Asda, respectively the first, second and third largest UK food retailers, will have a tougher time convincing the authorities that they should be allowed to progress.
Morrisons made the initial offer for Safeway, which at the time was recommended by the Safeway board, but the other major players were quick to see the potential for growing their business in a traditionally stagnant UK retail market.
Safeway has since said that it can no longer recommend the Morrisons bid, as it has to assess all the other potential offers, but has nonetheless reiterated its assertion that a link up with the smaller company would offer the best chance of creating a competitive fourth player in the UK supermarket sector.
Morrisons shareholders clearly agree, as they wholeheartedly backed the company's bid for Safeway at an Extraordinary General Meeting yesterday. "We have clear plans for Safeway. The strength of Morrisons' retail offer, our tight cost control and benefits of scale will transform Safeway's performance. A strong and competitive fourth force in national food retailing will ensure customers receive the lowest possible prices while suppliers benefit from fair and equitable terms. A marriage of Safeway and Morrisons can bring these advantages over any other combination," said executive chairman Sir Kenneth Morrison.
