Safeway continues to dominate interest

Supermarket chain Safeway continued to dominate interest in London today as reports of a potential bidding war for the group emerged.

The Times said Sainsbury’s and Asda’s US parent Wal-Mart could team up to bid for the group which yesterday agreed an offer from Morrisons.

Shares in Safeway were up more than 3% in early trading, rising 7p to 263p, in an otherwise dull start to trading on the wider FTSE 100 Index.

After an hour’s trading, the Footsie was down 6.1 points at 3927.9, falling back from an earlier climb of nearly 20 points.

The Times said that under Wal-Mart and Sainsbury’s plans, the US group would take 75% of Safeway’s stores and Sainsbury’s the rest.

Sainsbury’s was off 0.5p today at 258p, while Tesco eased 3.25p to 189.25p. Morrisons was ahead 3.25p to 183.25p.

It was a quiet start elsewhere in the City although banks were making slight gains with Barclays up 5p at 391.75p and HBOS ahead 6p at 644p.

British Airways was the heaviest blue-chip faller, off 5.25p at 133.25p, after a downgrade from stockbroker Credit Suisse First Boston.

But telecoms group Cable & Wireless was up 3p at 51p after it appointed Richard Lapthorne, of healthcare group Amersham, as its new chairman.