Scotland is the last uncolonised region for the big supermarket groups. They see Wm Low as a way of building instant market share. Planning consent for new superstores has become much harder. No one is going to create a grocery empire from scratch any more. Growth has to come from acquisition.
In theory, Sainsbury should always be able to justify a higher bid than Tesco because the fit is better. Sainsbury has just three supermarkets north of the border, so the overlap and risk of 'cannibalisation' - the poaching of one shop's customers by another - is minimal. Tesco is already much more established in Scotland, and buying Wm Low would give it a second, unnecessary distribution system.
Tesco is in danger of losing, whatever happens. If it finally captures Wm Low, it may be accused of paying too much. If it pulls out, it looks rather foolish for having put Wm Low 'in play' at all.
There is one other curious aspect to the battle. Some in the City wonder how on earth the Wm Low board and its advisers, Baring Brothers, could possibly recommend Tesco's offer, especially without sounding out Sainsbury first. The omission seems all the odder because Sainsbury had been talking to Wm Low as recently as last year.
This is a bit hard. First of all, Wm Low looked like a very different creature a month ago. The shares had dropped as low as 138p in March. Underlying sales in the shops were plunging by an alarming 12 per cent. With no sign of price wars abating, the outlook was grim.
Second, Wm Low's chairman, James Millar, did succeed in wresting some concessions out of Tesco's Sir Ian MacLaurin. The original offer, I understand, was less than 200p a share.
Third, Wm Low needed a firm offer on the table if it was to stir up a proper auction. Sir Ian refused to make the offer public without a recommendation from the Wm Low board and irrevocable acceptances from individual Wm Low directors.
Now that David Sainsbury has come out of the bushes, the board recommendation is meaningless and the acceptances lapse. Mr Millar and Barings chose an unorthodox way of getting an auction going, but it seems to have worked for all that.