Competition issues could thwart Morrisons’ attempt to raise cash from a quick sale of Safeway stores in Northern Ireland, new research by CACI suggests.
Morrisons is understood to have sent out information packs on the 12 Safeway stores in Northern Ireland to a handful of retailers in order to test the market (The Grocer, July 24, p6).
However, seven of the 12 stores could be out of bounds to Tesco and Sainsbury for competition reasons, while Dunnes is not believed to be interested.
Research by CACI shows that six of the Safeways are less than 4km away from Tesco stores, while nine out of 12 were cited as “problem stores for Tesco” in
last year’s analysis by the Competition Commission.
Likewise, Sainsbury is within 6km of four of the Safeway stores and was told it could have problems with up to eight of them by the Competition Commission.
Despite the regulatory issues in the province, Morrisons appears to have limited its approaches to a handful of the market leaders, said one retail source. “It seems to have been pitched as ‘how much can we make from this?’ rather than, ‘we are definitely going to sell.’ It was pretty low key.”
The Grocer Top 50 member Longs Supermarkets was not approached, said joint managing director Brian Long. “Morrisons has kept pretty quiet about this. Given the opportunity, we could well have been interested in some of the stores.”
Fellow member of The Grocer Top 50 Curley’s declined to comment, but is understood to be looking at the Westwood store in Belfast.
Musgrave is also thought to have looked at some of the stores, although several SuperValu outlets are quite close to the Safeway sites. The Co-operative Group, which also has a strong presence in the province, declined to comment.
Although Asda has no presence in Northern Ireland and would not face any competition issues, it was unlikely to be interested in all of the stores, and was probably not interested in buying just a handful, said one analyst.
Morrisons was not desperate to sell the Northern Ireland stores, although the cash from a sale would help reduce debts, he added: “It is probably just sounding out the market.
“With the competition issues, however, it might have to sell to retailers that are outside grocery, which means it won’t get anything for goodwill.”
Elaine Watson