Mergers and Takes Essay example

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Takeover-this is when a business takes over another business. There are three types of takeovers; friendly, hostile and reverse. The Morrison takeover is considered as a friendly takeover because the Safeway was being offered bids by its rivals such as Asda, Tesco and Morrisons.

Morrison’s seals Safeway takeover | Morrisons tabled its initial bid for Safeway in January 2003 |
Britain's supermarket landscape has undergone sweeping change on Monday as Morrison’s completes its £3bn ($5.2bn) takeover of rival grocer Safeway. The move brings to an end one of the most keenly contested UK acquisition struggles in recent years. Bradford-based Morrison’s sparked a bid battle for Safeway last year after launching a £2.9bn offer for the firm. It claimed victory after the government ruled against rival supermarket group bids on competition concerns. In mid-morning trade on the London Stock Exchange, shares in Morrisons were down 0.5 pence at 248.5 pence. New look Britain's big three supermarket chains - Tesco, Asda and Sainsbury's - all made counter offers for Safeway, along with billionaire retail entrepreneur Philip Green. | The battle for Safeway 9 January 2003: Morrisons makes £2.9m bid for Safeway 14 January: Rivals Asda and Sainsbury's make it a three-way takeover battle 20 January: Billionaire Bhs owner Philip Green throws his hat into the ring 22 January Tesco launches Safeway bid. US buyout specialist Kohlberg Kravis Roberts also expresses interest 26 September: Morrisons given go-ahead for bid after inquiry by UK competition watchdogs 15 December: Morrisons makes fresh £3bn offer for Safeway |
Morrison’s' takeover of Safeway - which will give the grocer a bigger slice of the market in southern England - increases the pressure on Sainsbury's for third place in the UK supermarket rankings. The enlarged group will operate more than 550 stores, and plans are already in place to rebrand many of the larger Safeway stores as Morrisons. The group is also considering converting nearly 180 medium size Safeway stores into a "Morrisons Compact" brand, to challenge the likes of Tesco and Sainsburys which operate smaller branded town centre outlets. Annual savings Unlike Morrisons' original offer, the revised deal comes with a cash element - 60p per share - designed to appease stockholders disappointed that the original bid was made entirely in shares. Family-run Morrisons expects to achieve annual cost savings of some £215m from the takeover, compared with an earlier estimate of £250m. South American mining group Antofagasta has taken Safeway's place in the FTSE 100 Index | | |

Case study 2
The guardian
The £3 billion takeover of Safeway has moved a step closer after Morrisons shareholders overwhelmingly approved the move.
Morrisons shareholders voted 99 per cent in favour of the bid, which would create the UK's fourth largest supermarket chain. Safeway also said its shareholders voted "overwhelmingly" in favour, but did not give the exact outcome of the vote.
Sir Ken Morrison, chief executive of Morrisons said: "This merger will be a transforming step for Morrisons, enabling us to take the distinct Morrisons formula and our passion and flair for food retailing to customers everywhere in the UK."
He said the result endorsed the group's strategy and underlined the benefits for customers, suppliers, employees and shareholders.
The deal should combine Morrisons' strength in the Midlands and north of England with Safeway's presence in Scotland and the South, giving it a total of 552 stores.
However, it is also likely to mean the loss of about 1,200 jobs, as Morrisons plans to replace Safeway's head office in Hayes with an enlarged facility in Bradford.
Cost savings and trading benefits worth £215 million a year are expected by January 2008.
The completion of the merger in March would come 14 months after Morrisons first shocked the retail sector with its proposal to buy Safeway. Rivals Tesco, Asda and Sainsbury's were
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