Britain Holds Up Wal-Mart, Other Safeway Bidders

Great Britain threw cold water on a bidding war for the country’s fourth-biggest supermarket chain Safeway Plc on March 19, ordering all but one of the five bidders to undergo a competition inquiry.

Safeway shares slumped nine percent immediately after the government ordered the Competition Commission to look into all of the four supermarket chains in the bidding fray, including ASDA Group Plc, which is owned by Wal-Mart Stores Inc. of Bentonville

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 UK’s 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, as well as an offer from Morrison Supermarkets Plc, all of which are based in Great Britain.

The top four grocery chains already control 70 percent of the $156 billion a year UK market but their options for further expansion are limited by strict building laws. Safeway has 480 stores and a 10 percent market share.

In early March, Wal-Mart tried to supercede the UK Department of Trade and Industry ruling by acquiing a stake in Safeway, the Sunday Telegraph of London reported on its Web site. Safeway PLC’s 10 largest shareholders control 54 percent of the company, the Telegraph said. Under the rules of the UK takeover code, Wal-Mart is the only bidder still able to acquire shares in Safeway.

Wal-Mart is talking to a Chinese company about leasing space for an outlet in Shanghai, the Chinese firm said on March 19.

Wal-Mart, which is planning its first move into China’s wealthy east coast, aimed to rent part of a commercial building under construction in the northeastern part of the city, said its potential Chinese partner, property developer Wanda Group.

Wal-Mart, which now has 26 stores in China, mainly in the north and south, declined to comment on the Shanghai project.