Takeover war spells end for Safeway staff

Safeway’s 100-strong marketing team, led by marketing director Karen Bray, faces the axe if Wm Morrison Supermarkets recommended offer for the company or any competing potential offer from rivals Sainsbury’s or Asda Wal-Mart is accepted.

Its advertising agency Clemmow Hornby Inge also stands to lose the &£4m Safeway advertising account as the brand will all but disappear if any takeover bid succeeds.

Morrisons plans to close Safeway’s head office in Hayes, Middlesex, and to make 1,200 non-store job cuts if its share-based offer, made on Thursday and valued at &£2.9bn at the time, is accepted by Safeway’s shareholders. Morrisons, which has its own 20-strong marketing team led by marketing services controller Michael Bates, intends to rebrand 358 Safeway stores under the Morrisons name, leaving 121 smaller stores trading under the Safeway brand. Morrisons spends more than &£7m a year on advertising and uses Poulters of Leeds.

Sainsbury’s is also considering making a cashand share-based offer that would value Safeway at about &£3.2bn. It claims to have identified &£300m of cost savings, including marketing and head office expenditure, if the two businesses are combined and the Safeway stores rebranded as Sainsbury’s. It estimates that up to 1,700 jobs could go and that it would have to sell about 90 stores to satisfy competition authorities.

Asda’s owner Wal-Mart confirmed on Tuesday that it was considering making an all-cash offer for Safeway and was making a submission to the Office of Fair Trading for regulatory clearance.

The Scottish Football Association claims that any buyer of Safeway will be obliged to honour the supermarket’s four-year sponsorship of the SFA.


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