Five parties are left in the bidding battle for Safeway, the UK’s number four supermarket chain, after American buyout firm Kohlberg Kravis Roberts suddenly dropped out.
KKR threw its hat into the ring last month [WAMN: 17-Jan-03], but after due diligence it has reportedly decided the price is too high. The US firm is said to have been particularly concerned at the costs incurred by Safeway’s ‘high-low’ price tactics – offering hefty discounts on selected products and distributing leaflets to inform customers.
Its decision to withdraw from the auction may cause a few red faces at Credit Suisse First Boston, which shocked Safeway by abruptly quitting as the supermarket’s broker in January to join the KKR bid.
The five remaining interested parties are William Morrison, Tesco, Wal-Mart-owned Asda, J Sainsbury and retail investor Philip Green. Morrison has so far filed the only formal bid, and its chances of success will be boosted by the removal of KKR – hitherto a tempting option for Safeway as no competition issues were involved.
Data sourced from: Telegraph.co.uk; additional content by WARC staff