British supermarket chain Sainsbury today threatened to trump an agreed takeover offer for rival chain Safeway using cash and shares worth about £3.2 billion sterling (€5.15 billion).
Sainsbury, stung into action after an all-share bid for Safeway from William Morrison Supermarkets last week, said it was considering offering more than 300 pence per share for the country's fourth-largest food retailer.
Shares in Safeway, Britain's second-biggest chain, rose 6 per cent to 297 pence in pre-market trading today - above the 251-1/2p implied by Morrison's offer. Sainsbury's shares were little changed.
The outcome of the battle - which may involve a bid from Britain's third-biggest supermarket chain, Wal-Mart, owned ASDA - will reshape an industry already dominated by a few players. Competition authorities are also likely to insist on some store disposals to prevent local monopolies.
Sainsbury said it believed it would have to sell 90 stores to satisfy Britain's Office of Fair Trading. It also saw 1,700 potential job losses and annual savings of at least £300 million from the combination.