Tesco joins Safeway takeover battle

The UK’s largest supermarket chain Tesco muscled in on the takeover battle for Safeway today by revealing it was considering a bid for the business.

Chief executive Terry Leahy said the group was lining up a part-cash, part-share deal that would prove “compelling” to Safeway shareholders.

Tesco is the sixth player to declare its interest in Safeway and its move adds another dimension to what is certain to prove an unprecedented takeover battle.

Morrison’s has already agreed a deal while Sainsbury’s, Wal-Mart, Bhs billionaire Philip Green and US buyout giant Kohlberg Kravis Roberts are also planning bids.

Tesco is the clear market leader in the food retail sector and any offer would be likely to face intense scrutiny from competition authorities.

But Leahy said he believed Tesco should enter the fray given it was clear regulators were being asked to consider a major shake-up of the sector.

“We have watched the situation closely and thought a lot about it. What we could see was the authorities were being asked to consider a major restructuring of our industry, going from four national players to three,” he said.

“In these circumstances it’s important the Tesco case is heard.”