Littlewoods chief warns Morrison

A leading retailer and one-time head of Somerfield has claimed the proposed merger between Wm Morrison and Safeway would be "disastrous".

David Simon, who left Somerfield in 2000 and now heads Littlewoods, predicted the merger had a good chance of being accepted by Morrisons and Safeway shareholders, despite the attentions of rival bidders J Sainsbury, Asda, Tesco and Philip Green.

Although Mr Simon said he admired Sir Ken Morrison, the chairman of Morrisons, he said the two companies had different cultures that would find it difficult to mix.

"I hope [Sir Ken] doesn't succeed because I think it would be a disaster for the business," he said. "The cultural differences between Safeway and Morrison ... are off the scale."

Mr Simon said Morrisons was a straightforward business, autocratic and price-conscious, but that Safeway was much "softer", with pricing at the upper end of the spectrum. Referring to a scenario in which Sir Ken would be running both companies, he said: "I think he would find it a nightmare."

Mr Simon had problems integrating the discount retailer Kwik Save into his business in his last job, a key factor in his departure, and he cited this as an example of the difficulties that could follow a merger. But City sources expressed surprise at his comments and doubted the two situations were comparable.

Sir Ken found support from Sir Geoff Mulcahy, founder and former chief executive of Kingfisher, the DIY retailer.

"I don't necessarily agree it would be disastrous, but it would be a huge challenge," Sir Geoff said. "If they don't win, they could be a candidate [for takeover] themselves. [Sir Ken] has got to go on."

A Morrisons spokesperson said: "We believe that Safeway and Morrisons are complementary in very many ways, and a quick, clean integration will lead to sustainable value being unearthed for customers and shareholders."

Crucial in determining who will get Safeway is the Office of Fair Trading's ruling on whether to refer the bids for investigation by the Competition Commission. A decision is expected this month.