>>Sir Ken will not risk morrisons by paying the wrong price
Nobody should be too surprised to see Philip Green pulling out of the Safeway auction. Despite his blustering, it is clear Green has been having second thoughts for some time. As we reported in our October 18 issue, he told a retail forum organised by Barclays that food retailing would be a tough nut to crack and that he would do nothing to jeopardise the success of his Arcadia and Bhs businesses.
“Suddenly everyone thinks there is an oil well under every high street shop,” he told the forum. “It will be interesting to see whether they buy at the wrong price.”
With Green having decided there is definitely no oil under Safeway - largely because the Competition Commission has made any deal completely unviable for entrepreneurs like him - that leaves Sir Ken Morrison as the only player. And he is keeping his cards very close to his chest. But then, why should he do any different? He’s had plenty of time to mull over a bid, and even when he finishes talking to the OFT, he will still have 21 days during which to decide whether or not to launch a bid.
So, in just under a year, we have gone from a five-way auction to a tense game of poker. On one side of the table you have Safeway, doing all it can to persuade Sir Ken that it holds a valuable hand. On the other side is the canniest player in town.
But will Sir Ken walk away from the table? I still don’t think this can be dismissed entirely. Consider this: Morrisons’ success is based partly on the fact it has built up a chain of relatively large stores (average 36,000 sq ft) in which it can sell its whole range and offer a national pricing policy.
If it bought Safeway’s disparate portfolio, that formula would have to be revised, particularly as Morrisons would find it hard in the current regulatory climate to sell stores it did not want.
Given all of that, I think it is highly unlikely Sir Ken would try to buy Safeway at the wrong price should he decide to launch a bid. Overpaying is just not part of Sir Ken’s DNA. And the fact everybody - including Safeway and its advisers - knows just how eager Morrisons is to get its hands on stores in the south changes nothing.
Just like Philip Green, I do not think Sir Ken would ever risk what he has built to buy a business for the wrong price. So the game rumbles on. It’s going to be a tense few weeks.
playing his cards right
Nobody should be too surprised to see Philip Green pulling out of the Safeway auction. Despite his blustering, it is clear Green has been having second thoughts for some time. As we reported in our October 18 issue, he told a retail forum organised by Barclays that food retailing would be a tough nut to crack and that he would do nothing to jeopardise the success of his Arcadia and Bhs businesses.
“Suddenly everyone thinks there is an oil well under every high street shop,” he told the forum. “It will be interesting to see whether they buy at the wrong price.”
With Green having decided there is definitely no oil under Safeway - largely because the Competition Commission has made any deal completely unviable for entrepreneurs like him - that leaves Sir Ken Morrison as the only player. And he is keeping his cards very close to his chest. But then, why should he do any different? He’s had plenty of time to mull over a bid, and even when he finishes talking to the OFT, he will still have 21 days during which to decide whether or not to launch a bid.
So, in just under a year, we have gone from a five-way auction to a tense game of poker. On one side of the table you have Safeway, doing all it can to persuade Sir Ken that it holds a valuable hand. On the other side is the canniest player in town.
But will Sir Ken walk away from the table? I still don’t think this can be dismissed entirely. Consider this: Morrisons’ success is based partly on the fact it has built up a chain of relatively large stores (average 36,000 sq ft) in which it can sell its whole range and offer a national pricing policy.
If it bought Safeway’s disparate portfolio, that formula would have to be revised, particularly as Morrisons would find it hard in the current regulatory climate to sell stores it did not want.
Given all of that, I think it is highly unlikely Sir Ken would try to buy Safeway at the wrong price should he decide to launch a bid. Overpaying is just not part of Sir Ken’s DNA. And the fact everybody - including Safeway and its advisers - knows just how eager Morrisons is to get its hands on stores in the south changes nothing.
Just like Philip Green, I do not think Sir Ken would ever risk what he has built to buy a business for the wrong price. So the game rumbles on. It’s going to be a tense few weeks.
playing his cards right
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