Lovering undeterred by Somerfield hitch

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The Independent Online

John Lovering and Bob Mackenzie are said to be pressing ahead with their bid for Somerfield despite complications thrown up by the Competition Commission's investigation into the five-way bid battle for rival Safeway.

The duo have made clear to their advisers they want to carry on working on their bid despite speculation in the last few days that their desire to buy the Somerfield and Kwik Save group is cooling.

Somerfield's shares slumped 7 per cent to 93p yesterday on rumours the two had decided to wait until after the Competition Commission ruling – probably in September – on the battle for Safeway before taking their own pursuit of Somerfield any further.

There were even suggestions that Mr Lovering's camp had decided not to raise its original offer of 103p a share, which was rejected by Somerfield's board three weeks ago.

That view has been knocked down by Mr Lovering's camp. Instead, Mr Lovering, who is also chairman of discount retailer Peacock, is thought to be working on ways to structure the bid for Somerfield in a way that would be acceptable to the commission.

The position of Mr Lovering and Mr Mackenzie was made much more difficult after Sir Derek Morris, the chairman of the competition regulator, said he would consider the convenience store market as part of his decision on who should prevail among the major supermarkets in the Safeway battle.

The statement surprised many who had thought the Safeway situation would be determined on the basis of market shares among supermarkets in their core market.

By broadening out the inquiry, the Somerfield situation looks partly dependant on the commission ruling because Mr Lovering wants to sell on some of the Somerfield convenience stores. Interested parties include J Sainsbury, one of the bidders for Safeway. Mr Lovering's advisers, Morgan Stanley and Bridgewell, are thought to be working on scenarios exploring possible store sales, which could be shown to the regulators to get guidance on.