LONDON -- Wm Morrison supermarkets has provisionally put an end to the question mark hanging over the future of Safeway U.K., as Morrisons announced an agreement with the board of Safeway on a $5.3 billion offer for the supermarket chain.
This new offer sees an increase on the $4.8 billion bid last January, which has now lapsed.
Morrisons will bring its value format and prices to the larger Safeway stores, defined by the company as those over 25,000 square feet. Smaller stores, between 15,000 and 25,000 square feet, will follow Morrisons' pricing and promotional programs, but the products will be tailored for those stores' demographics. Industry insiders said Morrisons considered Safeway an attractive acquisition because of its 10% market share and 480 stores in the United Kingdom. The approval of this merger means that Morrisons would own 552 stores and 13 million square feet of retail space.
Morrisons' acquisition of Safeway follows U.K. Trade and Industry Secretary Patricia Hewitt's stipulation last September that Wal-Mart/Asda, J Sainsbury and Tesco were to refrain from bidding for the chain because of anti-trust concerns.
Morrisons, as the U.K.'s fifth-largest food retailer, with 125 stores, will have to sell off 52 Safeway stores as part of the conditions of the merger.
Meanwhile, a Safeway spokesman denied reports in the British press that Morrisons plans to sell off approximately 140 Safeway stores.
