CSFB Deserts Safeway as Another US Contender Enters Joust

17 January 2003

Wall Street venture capital firm Kohlberg Kravis Roberts on Thursday confirmed its interest in British supermarket chain Safeway – the UK’s fourth largest – and said it is considering making an offer, joining the lineup of rival retailers William Morrison, J Sainsbury and Wal-Mart.

KKR, a feral scrapper, has been joined in its preliminary skirmish by none other than Credit Suisse First Boston, until earlier this month Safeway’s corporate broker and party to much privileged information that could benefit a bidder. As one London analyst reportedly remarked: “If you want loyalty, buy a dog.”

KKR was originally said to be in discussions with Wal-Mart about a joint bid for Safeway [WAMN: 15-Jan-03] and some observers doubt this is completely off the agenda.

It is not unlikely that a complex deal between the two predators has been forged in the hope this would circumvent UK competition regulators which might block a solus bid from Wal-Mart on grounds of its ownership of Asda, the nation’s third largest supermarketeer.

Tesco, numero uno in Albion’s supermarket sector, is meantime waiting in the wings, unusually silent. But few believe a bid from this quarter is likely as Tesco too would be hog-tied by competition issues.

Data sourced from: Multiple origins; additional content by WARC staff