Tesco today became the sixth party to enter the fray in the battle for control of Safeway, revealing it is considering making an offer for the UK's fourth-largest food retailer.
Tesco said the offer would be an appropriate mix of cash and new Tesco shares and would be set at a level which "will be compelling to Safeway shareholders and create value for Tesco investors".
Tesco leads the UK supermarket chains with a national market share of around 26 per cent, ahead of Sainsbury (17 per cent), Wal-Mart's Asda (16 per cent), and Safeway (10 per cent).
However, deputy chairman Mr David Reid said Tesco has "as strong a case" as rivals Wal-Mart Stores and J Sainsbury to put to the UK competition authorities.
"It is a serious bid. This isn't a spoiling bid," he said.
"We'd always understood that competition policy might limit consolidation in the industry. What the authorities are being asked to decide here is if four large players can be reduced to three as would happen with either the Wal-Mart or Sainsbury bid.
"Under those circumstances, Tesco believes that we've every right (to join in) and as strong a case as they have. We have an even stronger case if you take into account that we have the strongest ability to increase sales at the Safeway stores and turn them into additional profits," he said.
At 2.30 p.m., Safeway shares were trading at 319 1/4 pence sterling, down 4 1/4. Tesco shares were down 1 1/2 pence at 185 1/2.
AFP