Morrison's Clear to Buy Safeway UK
LONDON - Britain cleared family-run William Morrison Supermarkets Plc to buy rival Safeway Plc on Friday, Reuters reports. Losing out on the bid for the country's fourth largest supermarket chain are Tesco Plc, Wal-Mart's Asda and J Sainsbury.
Trade and Industry Secretary Patricia Hewitt said the country's top three chains would not be allowed to buy any part of Safeway, other than the 53 stores Morrison would have to divest in areas where its 123 stores overlapped with Safeway's 480 shops.
"The proposed acquisitions of Safeway by Asda, Sainsbury's and Tesco may all be expected to operate against the public interest, and should be prohibited," Hewitt said, accepting the argument prices could rise if four national chains became three.
Morrison welcomed the news, saying it was in the best interests of customers, suppliers, shareholders and employees.
"The choice was always between cementing the market for the long term in the hands of the big three or letting the fourth player gain in strength," the Consumers' Association said.
The National Farmers Union was also pleased, having feared the impact on suppliers if the top three became more powerful.
A combined Safeway-Morrison would have a market share of around 15.3 percent, in fourth place behind Sainsbury's 16.1 percent share, which is falling, according to Reuters. Asda has recently overtaken Sainsbury.
Morrison may yet face competition from UK retail baron Philip Green who has expressed an interest in bidding but has been waiting for Friday's decision before making up his mind. The door is also open for private-equity buyers to re-enter the race.
Morrison would normally have 21 days under takeover rules to make an offer, but it may be given more time as it works out details with the Office of Fair Trading on which stores will be sold and to whom.
Trade and Industry Secretary Patricia Hewitt said the country's top three chains would not be allowed to buy any part of Safeway, other than the 53 stores Morrison would have to divest in areas where its 123 stores overlapped with Safeway's 480 shops.
"The proposed acquisitions of Safeway by Asda, Sainsbury's and Tesco may all be expected to operate against the public interest, and should be prohibited," Hewitt said, accepting the argument prices could rise if four national chains became three.
Morrison welcomed the news, saying it was in the best interests of customers, suppliers, shareholders and employees.
"The choice was always between cementing the market for the long term in the hands of the big three or letting the fourth player gain in strength," the Consumers' Association said.
The National Farmers Union was also pleased, having feared the impact on suppliers if the top three became more powerful.
A combined Safeway-Morrison would have a market share of around 15.3 percent, in fourth place behind Sainsbury's 16.1 percent share, which is falling, according to Reuters. Asda has recently overtaken Sainsbury.
Morrison may yet face competition from UK retail baron Philip Green who has expressed an interest in bidding but has been waiting for Friday's decision before making up his mind. The door is also open for private-equity buyers to re-enter the race.
Morrison would normally have 21 days under takeover rules to make an offer, but it may be given more time as it works out details with the Office of Fair Trading on which stores will be sold and to whom.