Morrison's urges shareholders to back bid

British supermarket group Morrison’s, which sparked a bidding war for rival Safeway, today “strongly urged” shareholders in both companies to back its £2.4bn (€3.6bn) offer.

The move is an attempt to convince shareholders to support the deal ahead of an Office of Fair Trading ruling on five competing bids for the supermarket chain.

Bradford-based Morrison’s told shareholders its all-share offer was the only firm one “on the table” and added it was in the best interests of shareholders, customers, suppliers and employees.

Executive chairman Sir Ken Morrison says in the letter: “A combination of Morrison’s and Safeway will create a strong fourth force in national food retailing with lower prices for customers and benefits for suppliers.

“The strong start to 2003 demonstrates the strength of Morrison’s management and its culture. It also demonstrates that our offer for Safeway is not motivated by any shortage of growth in our own business, but reflects our wish to apply our skills as managers to a wider asset base. This expertise will benefit shareholders in both companies when the two combine.”

The six-way battle for control of Safeway has reached fever pitch with Tesco, J Sainsbury, Kohlberg Kravis Roberts and US-owned Asda rushing to snap up rival stores.

Morrison’s document attempts to dispel any fears among shareholders about the risk of integrating the two companies by outlining its track record for scrutiny.

The financial document also describes the £150m (€229m) of cost synergies which 71 year-old Sir Ken believes can be gleaned from the deal as well as an improved trading performance of £100m (€153m) from the third full financial year to January 2007.

BHS billionaire Philip Green is also seeking clearance to make a cash bid for Safeway, expected to be around £3.2bn (€4.89bn), or over 300p-a-share.

Mr Green’s Trackdean company has met the Office of Fair Trading and intends to make a formal submission seeking clearance for a possible cash offer.

Morrison’s original bid was worth £2.9bn (€4.4bn) but since then its shares have fallen, and the bid is now worth £2.4bn (€3.6bn) at today’s price.