Wal-Mart Considering Bid to Buy UK Safeway

LONDON - The world's biggest retailer, Wal-Mart Stores, said Tuesday it may offer to buy Britain's fourth-largest supermarket chain, Safeway PLC, which already has two attracted bids from two UK supermarket companies.

"Wal-Mart is considering making an all cash offer to acquire Safeway," Wal-Mart's wholly owned British subsidiary, ASDA Group PLC, said in a statement.

It gave no figure for the amount Wal-Mart is likely to offer, although ASDA chief executive Tony De Nunzio said the bid would be attractive and would be funded through cash reserves. He said a bid price would likely emerge after talks with competition regulators.

ASDA rivals Sainsbury PLC and William Morrison Supermarkets PLC earlier announced their interest in buying the company. On Thursday, William Morrison announced a surprise offer of 2.9 billion pounds ($4.6 billion) for Safeway. On Monday, Sainsbury said it was considering making an offer of cash and shares that would value Safeway at around 3.2 billion pounds ($5.1 billion).

"We have the financial muscle to ensure our offer is attractive to Safeway shareholders," De Nunzio said, although he also stated it would be wrong to assume that a Wal-Mart offer would be higher than Sainsbury's.

Any Wal-Mart bid would likely have to undergo a lengthy investigation by antitrust regulators that could last months.

ASDA, Britain's third-largest supermarket chain in terms of market share, has 245 stores in Britain, and Safeway has nearly 480 stores. Although ASDA has fewer stores, they tend to be much bigger than Safeway's.

A combined ASDA and Safeway would have a market share of about 26 percent, comparable to that of market leader Tesco. Sainsbury is the second biggest chain with 17.2 percent of the market. Morrison ranks fifth.

Wal-Mart said it intended to make a submission to the Office of Fair Trading to seek clearance for its possible offer. De Nunzio said ASDA has developed "a number of scenarios" about the number of stores the group would get rid of so regulators could allow Wal-Mart to buy Safeway.
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