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Sainsbury considers bid for Britain’s Safeway

SHARE Sainsbury considers bid for Britain’s Safeway

LONDON (AP) — British supermarket giant Sainsbury PLC said Monday it was considering making an offer of more than 3 billion pounds ($4.8 billion) for Safeway PLC, raising the prospect of a bidding war for Britain's fourth largest grocery chain.

Analysts said the U.S. retailer Wal-Mart Stores also was likely to bid for Safeway, which last week got a surprise offer of 2.9 billion pounds ($4.6 billion) from William Morrison Supermarkets PLC. Safeway is not related to the U.S. grocery company of the same name.

Sainsbury said it intended to file a detailed merger proposal to competition authorities next week and would offer more than 3.16 billion pounds ($5.06 billion) in cash and stock.

"This is a wonderful opportunity for Sainsbury's shareholders and Safeway shareholders, and we believe we can generate real value out of this," said chief executive Sir Peter Davis.

He said a deal with Safeway would generate cost benefits of at least 300 million pounds ($480 million) but could cost up to 1,700 jobs.

Any such deal would have to be approved by competition authorities. Sainsbury's said it believed it would need to sell off 90 of Safeway's 479 sites to "satisfy local competition issues."

Analysts said Wal-Mart — which owns British supermarket chain ASDA — was likely to make a bid, too.

"ASDA/Wal-Mart has not declared its hand at the moment, but I find any other outcome difficult to envisage," said Iain McDonald, a retail analyst at Numis Securities.

An ASDA spokesman said the company would not comment on market speculation.