Safeway takeover in the home straight
Morrison surprised the British supermarket sector with the
announcement of a £2.9 billion takeover bid for larger rival
Safeway. Now, more than a year later, the finishing line is finally
Both companies held extraordinary general meetings yesterday to give shareholders the chance to vote on the takeover, with the overwhelming majority of voters giving the go ahead for the deal.
The £3 billion takeover, which is now expected to be completed early next month, will take the form of a scheme of arrangement. Such schemes are relatively common for takeovers where both parties are in agreement, and would allow the merger to go ahead with just 75 per cent support from shareholders instead of the more usual 90 per cent.
However, the scheme still has to be approved by the UK courts, and the hearing is not scheduled to take place until 1 March - making 8 March the most likely date for the takeover to finally be completed - nearly 14 months after it was first announced.
Sir Ken Morrison, executive chairman of Morrisons, said: "This merger will be a transforming step for Morrisons, enabling us to take the distinct Morrisons formula and our passion and flair for food retailing to customers everywhere in the UK. We have very clear and detailed plans for Safeway and I am confident that we will be able to integrate the two businesses swiftly and effectively."
And that will really be the key focus for the company over the next year, as it imposes its own EDLP strategy and store-in-store format on the more traditional, promotion-driven Safeway.
The Competition Commission ruled last autumn that Morrisons would be the only trade bidder allowed to buy Safeway, with Tesco, Asda and Sainsbury all ruled to be too large to permit a complete takeover. These groups will now only be allowed to bid for the few stores which Morrisons must sell in order to meet the requirements of the competition authorities, although these stores will also be of interest to a number of other players.
Morrisons will now be the fourth largest player in the UK supermarket sector, although it will soon be rivalling Sainsbury for the third place spot.
The latest figures from TNS show that Sainsbury had a 16.5 per cent share of the UK grocery retail market in the 12 weeks to 1 February, up marginally from 16.4 per cent in the previous quarter, but that a combined Morrisons/Safeway would have 15.3 per cent.
Both groups are still some way behind market leader Tesco, whose share increased from 26.9 per cent to 27.2 per cent over the period, while second-placed Asda also edged higher, to 17.1 per cent from 17 per cent a month earlier.
With the Safeway merger now all but over, the major players are looking for other potential takeover targets, and two of the most widely mentioned chains posted less-than-impressive figures in January. Somerfield's share dipped to 5.2 per cent, according to the TNS data, while Iceland's remained unchanged at 2.3 per cent.