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Safeway takeover faces inquiry
LONDON, England (Reuters) -- Britain threw cold water on a bidding war for the country's fourth-biggest supermarket chain Safeway Plc on Wednesday, ordering all but one of the five bidders to undergo a competition inquiry. Safeway shares slumped nine percent after the government ordered the Competition Commission to look into all of the four supermarket chains in the bidding fray, including the smallest, Morrison Supermarkets Plc. Morrison had been thought likely to avoid a full inquiry. Retail baron Philip Green, who owns department stores but no supermarkets, was the only bidder to escape a competition probe. "This is certainly not the expected outcome," said Rupert Trotter, analyst at fund manager ISIS Asset Management. "This leaves the door open for Philip Green to make a very keenly priced offer." Trade and Industry Secretary Patricia Hewitt, on the advice of the Office of Fair Trading, ordered the commission to look into rival bids by Britain's top three food retailers Tesco Plc, J Sainsbury and ASDA, which is owned by U.S. Wal-Mart Stores Inc., as well as Morrison's offer. The top four grocery chains already control 70 percent of the £100 billion ($156 billion) a year UK market but their options for further expansion are limited by tough building laws. Safeway has 480 stores and a 10 percent market share. Hewitt said a takeover by any of the top three chains raised national and local competition issues while one by Morrison, the UK's fifth biggest supermarket group, raised only local issues. Competition experts had expected Morrison's £2.4 billion all-paper bid to be waved through with the minimum of fuss. The northern-based supermarket chain had been the only bidder with a firm offer on the table. The spotlight is now on Green, the owner of Bhs department stores and the Arcadia group of clothes shops to make the next move. He escaped a referral as he currently owns no food retail business. The trade bidders are likely to consider putting attractive indicative bids on the table to try and persuade shareholders in Safeway not to sell out to Green before they have returned from the competition probe. Hewitt said the competition review is due to be completed by August 12. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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