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Tesco-Meijer Deal Rumors Swirl

GRAND RAPIDS, Mich.--In a possible harbinger of what many observers expect to be a wave of M&A deals in the retail food sector in the coming year, reports circulated in the British and American business press yesterday that Tesco PLC, the U.K.'s largest grocer, is poised to take a 49 percent stake in Meijer Inc., based here.

A report that originated in The Grocer, a British industry trade publication, said Tesco is expected to pay about $4.2 billion in the deal, which is expected to be announced within two weeks.

Officials from Meijer did not return phone calls yesterday seeking confirmation. Press reports said Meijer issued a staff memo dismissing the rumors of an impending deal. "It is important for our entire team to know that these rumors are false and that we are not negotiating with any company for the sale of any part of our company. Our family is committed to Meijer's future and our success," Meijer was said to have written in the memo.

For its part, Tesco did not confirm or deny the Miejer deal, and yesterday refused to rule out entering the United States market. "It is a market we have been looking at for 20 years now, and we never say never," said a company spokeswoman.

Earlier this year, Tesco was linked with a bid for Albertsons Inc, though chief executive Terry Leahy subsequently denied any interest.

Meijer operates 170 stores in Illinois, Indiana, Kentucky, Michigan and Ohio, while Tesco has operations in 12 markets in Eastern Europe and South East Asia.

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