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LONDON - Morrisons, a medium-sized but fast-growing British supermarket chain, has announced plans to take over UK rival Safeway, in a deal worth GBP 2.9 billion ($4.67 billion), BBC News reports.
The combined company, with 598 stores, a turnover of GBP 12.6 billion and a market share of 16 percent, aims to be able to compete with Asda, Sainsbury and Tesco, the giants of the UK supermarket sector.
The retailers' marketing areas complement each other, as Morrisons has a strong presence in northern England, while Safeway is focused on Scotland and the South. In taking over Safeway, Morrisons will be swallowing a chain almost four times its size.
It is estimated that some 1,200 non-store jobs will be cut as a result of the merge.
The deal has been agreed by both firms, but still requires formal acceptance by shareholders, according to the BBC.
Analysts say a counter-bid for Safeway PLC could come as early as next week. Wal-Mart's Asda is viewed as the most likely contender, either alone or in partnership with another retailer. According to some press reports, Asda is working on a deal with J Sainsbury PLC to mount a joint bid for Safeway.
Neither Asda nor J Sainsbury have commented on the possibility of a counter-bid.
Any counter-bid would have to emerge quickly. Morrison's official offer document is believed to be expected next week, after which Safeway shareholders have 30 days to make up their minds whether to accept the offer.