Safeway has withdrawn its recommendation of Morrisons’ all-share bid for the supermarket chain following a series of higher indicative offers from rival bidders, writes Andrea Cockram.
It met today to consider its earlier advice to shareholders to recommend the offer made on 9 January. Morrisons’ offer valued each Safeway share at 277.5p, a 30.3% premium to the closing price of 213p on the previous day.
Since then Morrisons’ shares have slipped 13%. Based on Morrisons’ closing price on 22 January 2003, its offer is now valued at £2.5bn or 241p, a discount of more than 25% against Safeway’s current share price of 321.5p.
The move by Safeway’s board follows a handful of announcements from potential rival bidders.
Sainsbury’s is considering making an offer for Safeway in approximately equal amounts of cash and Sainsbury’s shares. Based on Sainsbury’s closing price on Friday 10 January 2003, this would result in a value per Safeway share of in excess of 300p.
On 14 January 2003, Wal-Mart announced that it is considering making an all cash offer to acquire Safeway, at an unspecified price.
US financial bidder KKR is considering its position, and Philip Green has also requested information to evaluate a possible offer for the company.
The latest bidder, Tesco, joined the fray yesterday.
David Webster, chairman of Safeway, said: “The board of Safeway continues to believe that a combination with Morrisons represents an opportunity to create a new dynamic force in UK food retailing and remains fully supportive of Morrisons pursuing its offer.
“However, in the light of the announcements by potential competing offerors, we are advising shareholders to await developments.”
Sir Kenneth Morrison, said: “We strongly believe that Safeway and Morrisons together will create a true, strong fourth national food retailer to the benefit of customers, suppliers, employees and shareholders alike.
“However, the Safeway board has been put in a difficult position by the extraordinary number of indicative bids that have emerged since we made our offer.”
EGi News 23/01/03
