Supermarket groups plan to derail BhS bid

SUPERMARKET groups Asda and Morrisons could team up to try to derail a rival bid for Safeway, it was reported yesterday.

US-owned Asda is ready to help Bradford-based Morrisons, which made a £2.9 billion bid for Safeway last January, if millionaire BhS boss Philip Green makes a counter-bid next month, according to a British newspaper.

Green has already got the go-ahead from the government to bid for Safeway, as he does not own any supermarkets.

But Asda, Morrisons and the other potential bidders for Safeway Tesco and Sainsbury's are waiting to hear whether they will receive government approval to table their own offers.

It is believed that a tie-up with Asda could make it easier for Morrisons to fight Green and would give Asda a role in Safeway's future while avoiding any competition concerns.

An Asda spokeswoman yesterday refused to be drawn on the report. "This is market rumour and speculation and we don't comment on that," she said.

lBritish Trade and Industry Secretary Patricia Hewitt is currently considering recommendations from the Competition Commission, which has been evaluating the competing offers.

Newspaper reports have suggested that the DTI will block possible bids from Tesco, Sainsbury's and Asda due to competition worries.

The commission has been trying to work out whether any of the proposed deals would create an excessively dominant supermarket group, which would damage shoppers and suppliers.

A ruling from the government is unlikely before the end of September, with another report yesterday suggesting that it could be delayed until early October due to a potential clash with the Labour Party conference.

Morrisons is expected to get the green light to bid for Britain's fourth-biggest supermarket operator.

But Asda is understood to have held a last-ditch meeting with the Competition Commission to argue its case thought to include a carve-up of Safeway's 479-store portfolio.

The government is reported to favour the Morrisons and Green bids because a takeover by any of the others would reduce the number of big supermarket chains from four to three.

The report in the Observer claimed that bankers believe Morrisons would be at a disadvantage if Green made an all-cash bid because the biggest part of Morrisons' offer would be in shares.

However, a tie-up with Asda would allow Morrisons to offer cash giving it a chance to beat off Green's challenge.