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Billionaire may join Safeway fray
LONDON, England (CNN) -- Billionaire Philip Green said on Monday he was considering a cash bid for Britain's fourth-largest supermarket chain Safeway. Green, owner of Bhs and Arcadia clothing stores, joins a five-way battle to control the under-performing supermarket chain, which is seen as the last big takeover target in the British grocery sector. William Morrison Supermarkets kicked of the tussle 11 day ago when its announced an agreed 2.48 billion pound all-share bid for Safeway. But the world's largest retailer Wal-Mart stores Inc., owner of No. 3 UK grocer Asda, as well as Britain's second-ranked grocer J. Sainsbury Plc and U.S. buyout firm Kohlberg Kravis Roberts (KKR) have said they are interested in making an offer. The final bids could come in excess of 3 billion pounds ($5 billion). Green, who is working with investment bank Merrill Lynch, said work on an offer was "at a very early stage and there can be no certainty that an offer will be forthcoming." Any offer from Sainsbury and Asda would face tough regulatory scrutiny but a bid from Green could get the green light as his retail empire, known for clothes chains like Top Shop and Burton, does not include food-retail outlets. Green plans to sell his clothing through Safeway's stores – one of the most profitable lines for Asda and Britain's biggest supermarket chain Tesco. Wal-Mart has expressed interest in an all-cash bid, while Sainsbury is considering a cash and share offer of at least 300 pence per Safeway share, valuing it at about 3.2 billion pounds. Analysts expect a succesful bid to be in the range of 330-340 pence but see the matter largely in the hands of competition authorities. And KKR has previous links to Safeway. It bought out U.S. Safeway for $4.8 billion in 1986, when the group owned just 11 UK supermarkets. KKR sold the UK stores the following year to Argyll, which changed its name to Safeway in 1996. KKR floated the U.S. chain on the stock market in 1990.
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