Bosses at Morrisons will visit Safeway’s headquarters on Monday to outline their plans for the combined group as its long-awaited deal to acquire Safeway is finally completed.
A Safeway source said Morrisons was keeping its cards close to its chest about some integration issues, such as redundancies. Morrisons is expected to cull around 1,200 of Safeway’s HQ staff with buyers the likely first casualties.
People issues are a major concern for those in the City. How Morrisons manages and motivates Safeway employees and retains key staff were important, analysts said.
Other City sources wanted to know about Morrisons’ plans for the smaller Safeway stores. “Will it keep the Safeway brand name? Will it sell them off? Whatever decision it makes, it will have a big impact on the competitive scene,” said one.
The City and industry will also be keeping close tabs on how Asda and Tesco respond to the deal. But Asda has already unveiled more price cuts (see story below).
According to IGD, the merger will create a company with sales of £14.6bn and a 12% share of the grocery market by 2007. It will have 578 stores with a total sales area of 14.1 million sq ft.
Its savings as a result of increased scale will total £692m over the first three years - £225m in marketing, £157m in buying, £180m in synergies and £130m through vertical integration.
The merger of the two chains has been sanctioned by the High Court and on Monday Safeway becomes a wholly-owned subsidiary of Morrisons.