Tesco and J Sainsbury could see their credit ratings damaged if they buy any part of the Safeway supermarket chain, Standard & Poor's, the credit rating agency, warned

Food & Drink Weekly, August 25, 2003

Tesco and J Sainsbury could see their credit ratings damaged if they buy any part of the Safeway supermarket chain, Standard & Poor's, the credit rating agency, warned. A purchase of any part of the Safeway estate of 480 stores would bring "marginal benefits" to the companies but would weaken their financial profiles and lead to a lowered rating, said S&P.

Tesco and Sainsbury are two of four rival supermarket groups that have expressed an interest in bidding for Safeway and whose proposals are being reviewed by the Department of Trade and Industry. Asda, owned by Wal-Mart and Wm Morrison have also put their hats in the ring. A fifth offer, from Philip Green, the billionaire owner of the Arcadia retail group, is not subject to government scrutiny as Green does not own any supermarkets. Tesco and Sainsbury are thought unlikely to be given government go-ahead for a full bid for Safeway. Both own a large number of stores around the country and have significant overlap with Safeway, raising competition concerns.