Food retailer William Morrison Supermarkets has unveiled a new agreed £3 billion sterling bid for rival Safeway to challenge for third position in the supermarket sector.
The offer of 283 pence a share, including 60p in cash, will bring the long-running takeover battle for Safeway into its final stages, nearly a year after Morrison made its first all-share bid of £2.9 billion in January.
Morrison shares rallied as much as 4 per cent to a 14 month high of 232 pence, slightly increasing the value of its offer and helping Safeway shares up to as high as 293-3/4p.
Morrison, Britain's fifth-ranked food retailer, was cleared by regulators to bid for number four-ranked Safeway in September, on condition it sold 52 stores. The same ruling also blocked Britain's three biggest supermarket groups - Tesco, Wal-Mart's Asda and J Sainsbury.
Safeway had been coveted by all of its big supermarket rivals, which were looking for ways to expand in a country with tough planning laws and a shortage of sites.
Numis Securities' Hughes cut his price target on Safeway shares to 300p from 340p, but thought there was still a chance a rival bidder could emerge, probably a private equity firm.
Sources close to the situation told Reuters on Thursday that Asda had approached Safeway with an offer to buy 70 of its stores for close to £2 billion.
However, family-run Morrison was confident competition regulators would block such a move, and was optimistic of completing its deal by around March 2004.