Safeway bids unlikely to be stopped by regulator

The Competition Commission would be unlikely to completely block any of the potential bidders for Safeway, according to an independent retail analyst.

Numis Securities analyst Mark Hughes said he believes every potential buyer will have to overcome regulatory hurdles, but that the watchdog will not fully put the brakes on any bid.

Hughes, one of the few remaining analysts not associated with any Safeway suitor, explored the issue at length in a 48-page note.

He said that if Wal-Mart won, the likely disposal of approximately 120 stores would mean the retailer - with a market share of about 23 per cent - would still not be the market leader.

According to Hughes, even a bid from Tesco is unlikely to be quashed, although the grocer would have to sell off about two-thirds of Safeway's 480 stores.

He said: 'Tesco got the green light for T&S Stores - that gave them 26 per cent and that (deal) could have been considered anti-competitive.'

He said that the Competition Commission will be concerned about pressure on suppliers on the back of a Safeway takeover by one of the bigger players.

However, Wal-Mart's buying power is already so great that the acquisition of Safeway would make little difference.

Separately, Morrisons issued its offer document to shareholders last Friday. The Yorkshire-based business is planning to spend£360 million on upgrading and converting Safeway stores if it is victorious.

The first closing date for acceptances of the offer is February 21.