Air of gloom hangs over Safeway HQ

Everyone knows Safeway's head office faces the chop. Someone tell the workers

The ignominy of being sandwiched between Southall and Slough on the railway line west from London may strike some as punishment enough. But for Hayes and Harlington, the London borough that has been Safeway's home since the late Eighties, the uncertainty hanging over the future of the supermarket chain has prompted any lingering community morale to plumb fresh lows.

Although the bid battle that is raging for control of Britain's fourth-biggest supermarket chain looks likely to continue for some months yet, one outcome at least is practically a dead cert: the closure of Safeway's headquarters. And that is bad news for a town that, in the words of its own MP, has been in decline for 20 years.

Hayes may skirt that greatest of Eighties economic marvels, the M4 Corridor, but like many of the region's hi-tech tenants, it has seen better days. A car junkyard and plumes of smoke from a forest of factory chimneys greet those visitors to the town who have opted to arrive by train, rather than navigate its maze of unfriendly one-way streets. The high street is home to a string of second-rate shops of which Iceland, the struggling supermarket, and Greggs, the mass-market baker, are the unlikely stars. A branch of Albemarle & Bond, the pawnbroker, has pride of place.

Plans are afoot to revamp the town centre, which has been devastated by the recent facelift for neighbouring Uxbridge, but even these have been threatened by the cloud that is hanging over Safeway. John McDonnell, the area's Labour MP, said: "This is a real blow to the regeneration of the town centre because it takes away potential spending."

Under the merger proposal from William Morrison – the Northern supermarket chain that sparked the bidding frenzy with the one firm bid on the table – Safeway's head office would be closed, with the loss of 1,300 jobs. The remaining 1,000 staff would be lured to Morrisons's own base in Bradford, West Yorkshire, where a new headquarters is being commissioned. The redundancies would be gradual, with the site destined for final closure in 2005. J Sainsbury, which has made an indicative £3.15bn cash-and-shares offer, has threatened 1,700 job losses and is also likely to shut down the Hayes offices. Meanwhile, Wal-Mart, the US giant that owns Asda, may have avoided all talk of its plans for the site, but it, too, is expected to wield the axe.

Indeed, the town's only hope looks to be that one of the rogue bidders – Kohlberg Kravis Roberts, the US leveraged buyout specialist, or Philip Green, the retail entrepreneur – manages to win over Safeway shareholders with their wads of cash. As one local café owner put it: "Mind you, if BHS [which Mr Green owns] buys it, it'll probably keep the building."

Not that the building itself is any great shakes. Located on an industrial estate, a 10-minute hike from the town centre, Safeway HQ is a series of soulless beige and grey office blocks. The group moved there from its former base at Aylesford in Kent in 1987 after Argyll bought the chain from its US owners. Three buildings sprung up in total, until the lack of potential car parking space capped capacity at about 2,300 employees.

Naturally enough, talk of the latest bid shenanigans is all the rage at the nearby parade of shops. Tina, at Carry on Eating, a sandwich bar, said: "It'll make a big difference to this parade. Most of our business is from Safeway. They come in here for their sandwiches." Ashwan, at Orlando, an artery-unfriendly fast food joint, said: "Ten to 15 people are coming in here every lunchtime. It will be bad for business." Mr Patel, a local newsagent, said a quarter of his trade depended on the Safeway HQ. But most were resigned to the eventual outcome. Mr Khasmani, a pharmacist, summed it up: "Once it's decided, it's decided. Hayes is such a dead place anyway."

While local shopkeepers will certainly miss any passing footfall, any lasting scar on the neighbourhood is likely to be tempered by the lack of general community spirit. That the Safeway staff rarely, if ever, pop to The Victoria, a local pub, according to its licensee, seemed symptomatic of the town's general malaise. To be fair, the landlord's recent bid to entice afternoon drinkers through a free stripper with your pint probably did little to curry favour among Safeway employees. Either way, The Victoria is not holding its breath for a rush of business from Safeway staff when its kitchens reopen in the spring.

So far, despite the uncertainty over the chain's future, Safeway is keeping a tight lid on the general HQ rumour mill. Staff are under strict instructions not to be lured into talking to journalists – although one assumes that newspapers' financial pages are fair game. Its employees are e-mailed updates (on a seemingly daily basis) of the latest twists in the bid battle. And David Webster, the chairman, and Carlos Criado-Perez, the chief executive, will be among the directors fronting a series of meetings this morning to give staff the latest lowdown.

It is early days, of course, but the web of delusion spun by Messrs Webster and co looks to be working. Chiefly, this comprises telling staff that any potential buyer – even, it seems, Morrisons – plans to keep Hayes on as a regional office. "We personally are going to be keeping our jobs regardless of who takes us over. That's what we've been told by our line managers," one employee in the group's administration department said. Others were similarly sanguine. "I mean, there's five bidders that want us, so we'll wait and see what happens," one said. Another was even blunter when quizzed about his job fears. "I'm not worried, no," he said bluntly.

By far the biggest concern seems not to be that Safeway's eventual owners won't manage to find a buyer for the Hayes offices, but that the site will end up becoming that most hateful local scourge: warehouse space for neighbouring Heathrow. Mr McDonnell, for one, will be watching the situation closely. In the meantime, it's back to the grapevine for news of what fate has in store for Safeway's Hayes staff.

Texas Pacific tipped to join the bid war

By Nigel Cope

Texas Pacific, the American venture capital group, is the latest firm linked with a possible bid for Safeway, Britain's fourth-largest supermarket group. The US buyout specialist is said to be one of several private equity groups considering entering the £3bn bid battle for Safeway.

Texas Pacific's interest is thought to be at an early stage and the firm declined to comment yesterday. Safeway said it had not heard from Texas Pacific yesterday. Texas Pacific is an aggressive operator whose most recent blockbuster deal was the $1.5bn (£928m) buyout of Burger King from Diageo in December.