The British government has ordered its Competition Commission to investigate four out of the five companies that are looking to acquire Safeway Plc there. The probe is scheduled to be completed by mid-August.
Affected by the ruling are Tesco, Sainsbury, Wal-Mart, and William Morrison Supermarkets. Only retail magnate Philip Green, who does not own any supermarkets, was given the go-ahead to acquire the company straight away.
The ruling came as a surprise to many who believed that Morrison, the nation’s fifth largest retailer and the company that got all this started with its bid for Safeway, was likely to escape scrutiny. While Safeway seemed to prefer the Morrison bid, this turn of events makes it possible for Green to swoop in and grab Safeway.
Morrison’s bid is lapsing, and the company said it is reviewing its options.
The probes are designed to make sure that too much retailing power does not reside in too few companies. Analysts quoted in the British press seem to believe that of the four companies being investigated, Morrison remains the only company that could get a go-ahead for a Safeway acquisition.
“I am not surprised by this decision,” said Tesco CEO Sir Terry Leahy in a statement. “We have always understood that competition policy limited consolidation of the four national players in our industry.”
There was some speculation in the media that US buyout firm Kohlberg Kravis Roberts might get back into the bidding war in the wake of this decision, but there is no evidence of the company planning such a move at this point.
Affected by the ruling are Tesco, Sainsbury, Wal-Mart, and William Morrison Supermarkets. Only retail magnate Philip Green, who does not own any supermarkets, was given the go-ahead to acquire the company straight away.
The ruling came as a surprise to many who believed that Morrison, the nation’s fifth largest retailer and the company that got all this started with its bid for Safeway, was likely to escape scrutiny. While Safeway seemed to prefer the Morrison bid, this turn of events makes it possible for Green to swoop in and grab Safeway.
Morrison’s bid is lapsing, and the company said it is reviewing its options.
The probes are designed to make sure that too much retailing power does not reside in too few companies. Analysts quoted in the British press seem to believe that of the four companies being investigated, Morrison remains the only company that could get a go-ahead for a Safeway acquisition.
“I am not surprised by this decision,” said Tesco CEO Sir Terry Leahy in a statement. “We have always understood that competition policy limited consolidation of the four national players in our industry.”
There was some speculation in the media that US buyout firm Kohlberg Kravis Roberts might get back into the bidding war in the wake of this decision, but there is no evidence of the company planning such a move at this point.
- KC's View:
- We hope the Morrison folks stay in it. That still seems like the best fit, and the one that promotes healthier and broader competition.
