The shares, around 426p two years ago, have suffered as competition has grown ever more fierce, putting margins under intense pressure. The group also encountered stock problems.
At one time it looked as though rival Asda would take advantage of Safeway's discomfort by mounting a bid. But Westminster killed off any such deal, indicating it would run into monopoly problems. Since then Asda's shares, down 1.5p at 155.5p, have lost so much ground that a merger must have lost much of its appeal.
As the market fretted about Safeway, still classified as a food retailer, investors were eating into the shares of food producers following the disappointing trading performance by Northern Foods, off 12.5p to 155p. Terranova, the chilled foods spin-off from Hillsdown Holdings, lost 10.5p to 101.5p, Hazlewood Foods 9p to 125.5p and United Biscuits 13p to 237p. Hillsdown lost 5.5p to 85p.
Geest, the old banana group now in chilled foods and fresh produce, lost 16.5p to 418.5p; the price has tumbled from 472.5p this month. There are indications that profit forecasts are being cut, and investment meetings this week are not expected to bring much comfort. The company could be in danger of falling out of the mid cap index when its composition is reviewed next month.
The rest of the market spent a quiet day waiting for the US interest- rate decision. Footsie, at one time 51.9 points higher, ended 7.8 off at 5,502.7. Mid caps, suffering indigestion from its food constituents, fell 26.5 to 4,809.1. The small cap index slipped 6.3 to 2,060.9.
GRE, the Guardian Royal Exchange insurance group, climbed 18.5p to 293.5p on The Independent's story of a strike from French group AXA/UAP. Trading was brisk. Sun Life & Provincial, the AXA vehicle which could make the bid, fell 22p to 500p.
FirstGroup's much better than expected results helped transport shares, with Stagecoach riding 14.5p higher to 242.5p and Go-Ahead 30p to 655p. FirstGroup put on 27p 392p.
Cable & Wireless firmed 8.5p to 696p as its 52.8 per cent-owned Australian off-shoot scored a 23 per cent premium on its Sydney market debut. Energis, which like so many hi-tech groups has produced figures offering nothing as crude as profits, rose 11p to 870p (after 902.5p). Dresdner Kleinwort Benson put a target of 1,015p on the shares.
Tomkins, following an investment presentation, was little changed at 273.5p and BTR, ahead of today's meeting with analysts, lost 6p to 100p.
Engineer TI's progress after Monday's trading update was short-lived; the shares fell 23.75p to 331p, losing most of their gains.
Drugs group Skyepharma rose 11p to 82.5p. A cancer drug being developed by a US group it has agreed to buy is edging towards approval by the US Food and Drug Administration; Skyepharma also disclosed that Swiss group Novartis is pumping pounds 6m into its shares at 70p a time and had signed a collaboration agreement to develop an asthma treatment.
Takeovers continued on the undercard, with Media Business up 28p to 104.5p as a US group offered an agreed 107p a share. Last month long-running takeover talks with an unidentified group were called off.
Profit warnings were also evident, with VHE, a building and engineering services group, signalling a profits slide and falling 32p to 39p. United Carriers fell a further 3p to 11p after last week's profits caution. Struggling Stordata Solutions lost 0.75p to 2.5p after abandoning a takeover deal.
The perils of US bids was illustrated by recruitment group Robert Walters, which fell 40p to 295p. The shares are to be delisted on Wednesday following the takeover by Staffmark. Until then Walters shares track the Staffmark price, which fell 11 per cent overnight. The August deal was said to value Walters at 430p a share.
Stockbrokers were firm on signs that Beeson Gregory could be for sale. Charles Stanley added 26p to 318.5p and Brewin Dolphin 20p to 380p. Garban, the money and securities broking group spun off from United News & Media, had a volatile debut. The shares moved between 197.5p and 235p, closing at 217p, with Seaq putting volume at 6 million. United rose 24o to 638p.
Sherwood International, the computer group, jumped 85p to 1,185p ahead of an investment presentation. Shield Diagnostic lost 50p to 517.5p on profit taking.
SEAQ VOLUME: 750.3 million
SEAQ TRADES: 57,829
GILT INDEX: 112.37 + 0.35
SOUTH BEACH Concepts, a loss-making group developing US-style restaurants, held at 1.25p after licensed dealer Everett Financial Management acquired a 9.6 per cent stake, subscribing for 18.8 million new shares.
A former Ofex company which moved to AIM, SBC's restaurants feature bagels, speciality coffees and fruit and vegetable juices. Its shares are 1.25p. They have been as high as 6p since switching to AIM.
SHARES IN Desire Petroleum, floated as a vehicle to search for oil and gas reserves off the Falkland Islands, fell 4p to a new low of 30p.
Fears are growing that the major oil groups are becoming disenchanted with exploring around the South Atlantic islands and plan to pull out. When Falkland fever was at its height Desire shares hit 445p. Westmount, with 14 per cent of Desire, lost 1p to 32.5p. Its shares hit 275p.Reuse content