Buoyant Morrison trading boosts Safeway bid

William Morrison Supermarkets' £2.4bn bid for Safeway received a boost yesterday when the company issued a bullish trading statement ahead of its offer document, which will be posted today.

In the four weeks to 26 January like-for-like sales were up 5.2 per cent on last year. This compared with a 2.4 per cent rise in the previous six weeks. Morrison shares rose 7 per cent to 169.5p on the news, valuing its bid for Safeway at 224p a share.

Sir Ken Morrison, the chairman, said he had no immediate plans to increase the bid. "We're not the kingmaker, and we're not the stalking horse," he said. "We are the main event."

He said Wm Morrison's all-share offer was the only firm bid on the table and that it was "deliverable" despite possible bids from J Sainsbury, Wal-Mart/Asda, Philip Green, Kohlberg Kravis Roberts and Tesco. "There's been a lot of sound and fury about other indicative offers," Sir Ken said. "If imitation is the sincerest form of flattery, then we've been flattered five times over. But we're not about to pocket the [£29m] break fee and go back to Bradford with our tale between our legs."

Sir Ken, 71, admitted the reaction from institutional investors in his company to the Safeway bid had been "mixed". He said: "They've had two questions, first have you got the ability to execute this deal and second, why this big surprise?"

He said the offer was not being sweetened to include any cash. "We've got an offer being launched tomorrow. The offer is the original offer as it stands. We're selling the future [in Morrison shares] not saying 'here's a quid.'"

Separately, a research note from Lehman Brothers said Safeway could be worth either 350p or 500p a share. Lehmans is one of the few major investment banks not involved in the Safeway bid frenzy and its sector analyst, Christopher Gower, considered two scenarios depending on the decision of the Competition Commission. If the field is limited to financial buyers and Wm Morrison, the price could reach up to 350p, he said. But if it becomes a free-for-all, he suggested: "Tesco would push Wal-Mart to a cash bid of at least 500p."