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Kohlberg Kravis Roberts & Co (KKR), the American private equity firm, announced that it has approached Safeway Plc in the UK about making a bid for the company.

In addition, at least three other leveraged buyout firms - Texas Pacific Group, Cinven and CVC – are said to be interested in the company. If any of these firms were to acquire Safeway, according to a report in The Financial Times, they would be likely to break up and sell individual stores.

This frenzy of interest in Safeway, the fourth-ranked UK grocer, started when Wm. Morrison Supermarkets bid on the company, followed in quick succession by Wal-Mart (which already owns the Asda Group there) and Sainsbury. Even Tesco has been rumored to be interested in putting in a bid just for Safeway’s c-stores.

Analysts believe that the Morrison bid and any offers that might be made by the buyout firms would be the most likely to pass muster with competition authorities. An acquisition by either Wal-Mart or Sainsbury will almost certainly raise red flags about too much power resting with too few companies, though it is impossible to know how the regulators finally will rule.
KC's View:
For the moment, we’re completely out of pithy commentary on this subject. We need to catch our breath.