BHS boss steps into Safeway bid battle

The list of potential bidders is still growing

Philip Green, the entrepreneur who owns the BHS and Arcadia retail groups, has joined the long list of those interested in taking over Safeway.

Mr Green said that he was considering a cash offer for the UK supermarket chain, and that he had asked for financial information from Safeway to help formulate his bid.

But he added that deliberations were "at a very early stage and there can be no certainty that an offer will be forthcoming".

The list of firms that have already confirmed their interest in buying Safeway include supermarket chains Morrisons, J Sainsbury and Asda's US parent Wal-Mart, and the US venture capital firm Kohlberg Kravis Roberts (KKR).

News of Mr Green's interest gave a fresh impetus to Safeway's shares, and they were up 8.5 pence at 313.5p by Monday lunchtime.

Expanding empire

A bid from Mr Green would mark his first move into food retailing.

Philip Green now has his eyes on the food sector

He already owns a sizeable chunk of the High Street following his £850m ($1.4bn) takeover last autumn of the Arcadia retail group, which includes the Top Shop, Burton and Miss Selfridge fashion chains.

Adding Safeway to his BHS and Arcadia groups would give him a portfolio of more than 3,000 stores.

Mr Green told the Reuters news agency he was working with Allan Leighton, former Asda boss and now chairman of Royal Mail, who is also chairman of BHS.

"We talked about it before Christmas, " Mr Green said.

"It has been on the radar for a while. We are working together on this."

He said one of reasons behind the bid was to introduce clothing to Safeway stores, which currently stock few non-food items.

But he said if his bid was successful he would not take a hands on role in running it.

"I've got two other businesses to run," he said.

The Financial Times reported on Monday that Mr Green had arranged financing from HBOS and could make a £2.9bn cash bid within 10 days.

Bid saga

The battle for Safeway was triggered by an agreed offer from the Morrisons supermarket chain on 9 January.

SUPERMARKET SWEEP

9 Jan - Morrisons offer

13 Jan - Sainsbury's confirms interest

14 Jan - Wal-Mart is 'interested'

17 Jan - KKR confirms interest

20 Jan - Philip Green confirms interest

At the time of the bid, the all-share offer was worth £2.9bn, but Morrisons' share price has fallen since the bid was launched and the offer is now worth about £2.5bn.

Morrisons' bid remains the only firm offer, but rivals J Sainsbury and Asda's US parent Wal-Mart have both expressed their interest along with the US venture capital firm Kohlberg Kravis Roberts (KKR).

Sainsbury has said its offer would be a mixture of cash and shares, valuing Safeway at about £3.2bn.

Meanwhile, Wal-Mart is lining up an all-cash bid which weekend press reports suggested could be as a high as £4bn.

But bids from Sainsbury and Wal-Mart are expected to come under close scrutiny from UK regulators.

At the weekend advisers to KKR told BBC News Online that the US buy-out firm would probably wait until the Competition Commission had blocked one or more of the rival offers before moving in.

Analysts said a bid from Mr Green would stand a fair chance of success because it was unlikely to come under the regulator's eye.

"What he sees is that he hasn't got a Competition Commission problem whereas the others (bidders) have," said Richard Ratner, analyst at Seymour Pierce.

"Unless one of the offerers which is referred puts enough clear space between it and the other bids, fund managers may prefer to take the money up front rather than wait six months and then find that it is frustrated by the Competition Commission."