Before it can table a renewed bid, Morrisons must provide undertakings to the OFT to divest 53 Safeway stores in areas where the Competition Commission has identified local competition concerns.
Although there is no formal timetable, this is expected to take up to six weeks, after which Morrisons has 21 days to table a renewed offer for Safeway.
Asda, Tesco and Sainsbury have been told which divested stores they are able to bid for on the basis of local competition issues.
The divestments are expected to raise between £500 and £600m, although the figure is not very meaningful as Morrisons has the option of selling off its own stores rather than Safeway store in the localities identified, and the lack of competition could depress the price, according to one source close to the company.
“Of the larger stores, there are only 17 where there is more than one player [out of the major multiples] actually eligible to bid,” says one analyst. “There are other potential buyers like Booths, but they are not going to be looking at many stores. And M&S has to prove it can provide a one-stop shop for groceries.
“However, Waitrose has got a good opportunity here.”
M&S and Waitrose declined to comment on their plans, although both are understood to be looking at sizeable chunks of stores.
Booths chairman Edwin Booth says: “Obviously we have a wish-list of stores we’d like and this is a real opportunity in a climate where our landscape is more than ever determined by planning laws.”
If Morrisons cannot sell the stores within a certain (undisclosed) period, it must place them in the hands of trustees who will manage the sale.