ASDA snaps up quartet of Safeway stores

Supermarket giant Asda boosted its presence in the British midlands today after agreeing a deal to buy four Safeway stores from rival Morrisons.

Three of the outlets – at Shrewsbury, Coventry and Burton-on-Trent – are among 52 Safeway shops that Morrisons must sell following its £3bn (€4.4bn) acquisition of the 479-strong chain earlier this year.

A fourth site at Northampton, which is not related to undertakings set out by the Office of Fair Trading (OFT), brings the net value of the stores being sold to £38.7m (€56.8m), although no price has been put on today’s agreement.

Asda currently has 267 stores but was barred from bidding for Safeway following a competition investigation last year. It must still secure the support of the OFT for today’s deal, which brings to 32 the number of outlets so far sold as part of the OFT ruling on a Morrisons takeover.

Earlier this year, Waitrose picked up 14 sites from Morrisons while Sainsbury’s has also agreed to buy a similar number.

Morrisons expects to provide further details on the prices achieved for the stores once the process has been completed. However, it said the price tags involved had been in line with expectations.

Joint managing director Bob Stott said: “Our integration of the Safeway business is progressing and today’s announcement is a further step in the overall process.”

Last month, reports said Tesco might buy some of the remaining sites, with Morrisons set to “retire” the rest because they are in undesirable locations or areas well served by potential buyers.

Morrisons is also considering offers for 120 of its smaller shops as the poor sales performance of the unconverted Safeway stores recently led the company to announce its first ever profits warning.

It has been more encouraged by the performance of outlets converted to the Morrisons format.