Reports suggest that Sainsbury's, the UK's second-largest supermarket group, could launch a joint bid with Asda's US parent Wal-Mart. According to a report in The Times, Wal-Mart would take 75% of Safeway's stores with Sainsbury's picking up the rest.
However, according to a source close to the deal quoted by Reuters, a deal with Wal-Mart is by no means certain. "Obviously, [Sainsbury's] is looking at the possibilities of doing something but exactly what the possibilities are or whether it will be with Wal-Mart or a financial sponsor has not yet been decided."
However, according to the source quoted by Reuters, there would be no immediate bid: "Sainsbury's has time and it's better to take that time to decide on how and if to counterbid (to Morrison) than to react off the cuff straight away."
Talk of a bidding war has excited City interest. Shares in Safeway were up more than 3% in early trading, rising 7p to 263p. Morrison's was ahead 3.25p to 183.25p. Sainsbury's was down 0.5p at 258p, while rival Tesco, the UK's number one supermarket group, rose 3.25p to 189.25p.
Sainsbury's is understood to have approached private equity houses including Royal Bank Private Equity and Kolhberg Kravis Roberts & Co about putting together a bid.
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