Safeway marathon enters home stretch

Speculation over the £3.5bn bid battle for the Safeway supermarket group reached fever pitch over the weekend as the five contenders prepared for the nine-month takeover saga to move into its final phase, with the verdict of a competition probe expected over the next week.

Philip Green, the owner of BHS and the only bidder who has escaped the lengthy competition inquiry, played down reports that he had decided to walk away from Safeway - although the City remains convinced that the retail entrepreneur has decided against further engagement. He said yesterday: "I am currently awaiting the outcome of the [Competition Commission] report."

Mr Green will today face intense questioning from the Takeover Panel over suggestions that he had ruled himself out of the running for the country's fourth largest supermarket chain. Under panel rules, bidders are not supposed to comment on any aspect of their potential offers without first issuing a statement to the London stockmarket.

Separately, Wal-Mart's Asda is understood to be sounding out private equity houses about joining forces if - as widely expected - Patricia Hewitt, Secretary of State for Trade and Industry, blocks its bid. She is expected to announce her decision next week ahead of the political party conference season, more than a month after the Competition Commission delivered its report.

If Asda, the country's number two supermarket group, could team up with a financial buyer, then it would be able to cherry pick Safeway stores under an exclusive deal, bypassing an auction for any surplus outlets.

Most City sources expect William Morrison, the Bradford-based group that started the bidding frenzy when it unveiled a proposed merger with Safeway in January, to be the only group cleared to bid.