Competition officials have revealed the 23 former Safeway stores that Somerfield may be forced to divest.
The move came as some City analysts predicted that Somerfield could be broken up if a consortium comprising Icelandic retail group Baugur and equity and property firms succeeded with its bid for the supermarket chain.
The mounting level of interest in Somerfield is being attributed to its 1,300-strong property portfolio - much of which is freehold - rather than its trading potential.
One analyst questioned Baugur’s decision to join the consortium this week. He said: “I’m not sure what Baugur’s strategy is here. But I can’t see a strong business reason for it.
They have a completely different type of customer base." But a source close to the bid denied the sole intention was to sell the portfolio: “The addition of Baugur makes the consortium that much stronger. The business may not be sold off - there are no plans, necessarily, to cut the existing management.” Somerfield this week opened its books to the consortium - made up of investment group Barclays Capital, private equity firm Apax, Baugur and property developer Robert Tchenguiz, who has already tabled a 205p-a-share offer that was declined.
Property group London & Regional is looking at a bid, backed by finance house Nomura, and property group Topland is also said to be interested in doing a deal.
Meanwhile, the Office of Fair Trading this week published the list of 23 stores that prompted it to refer Somerfield’s acquisition of 114 Safeway outlets from Morrisons. The OFT outlined areas where local competition could be stifled, listing 22 mid-range stores and one larger store, in Johnstone.
Somerfield has accepted that competition might be reduced in three or four of the areas, but contested the remainder.
And, as The Grocer went to press, it emerged that Apax had withdrawn its offer for Woolworths after due diligence. Apax said it reserved the right to make a new offer within six months.
Amy Balchin

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