UK govt Safeway decision fails to halt slide
The UK government’s verdict on the battle for supermarket chain Safeway failed to halt a slide in London’s leading shares today.
The FTSE 100 index continued early losses, sinking 48.5 points to 4153.7 by mid-morning, despite news that the Department of Trade and Industry had given William Morrison approval to bid for Safeway after a probe by competition watchdogs.
The Bradford-based family business emerged victorious after the British Department of Trade and Industry blocked potential bids from Tesco, Sainsbury’s and Wal-Mart-owned Asda on competition grounds.
However, traders appeared more concerned about the health of the US economy, with Wall Street slipping to its lowest level for around a month last night amid conflicting economic reports.
The battle for Safeway provided the main corporate interest in London.
Trade and Industry Secretary Patricia Hewitt said she would allow the proposed acquisition of Safeway by Morrison’s, provided it sold off some of the former’s stores.
Despite the news, Morrison’s lost an early 0.75p gain to stand 1p down 219p immediately after the DTI’s announcement.
Safeway itself also lost early gains, heading the Footsie fallers with a 12.5p loss to 284p.
But the UK’s number one supermarket, Tesco, edged up 2p on the news to 237p, near the top of the Footsie risers board, while rival Sainsbury’s fell 1.5p to 276.25p.
Catalogue retailer GUS was the biggest beneficiary of a quiet morning’s trading with a 9.25p advance to 688p.
Insurers were among the biggest losers, with Royal & Sun Alliance down 2.75p at 87.5p, Legal & General off 2.5p at 93.5p and Friends Provident falling 4.25p at 130.5p.
Outside the top flight, retail takeovers were also in focus after a report that private equity group Permira could up its bid for high street department store Debenhams, which lost 0.5p to 465.5p.
