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Published reports suggest that Wal-Mart's Asda Group has been talking to Sainsbury about making a joint bid for Safeway Plc in the UK, and then carving up the assets between them.

The bid for Safeway Plc would likely be in the range of the equivalent of $4.7 billion (US).

Sainsbury is the nation’s second-ranked supermarket chain, while Asda is number four. The companies seem to believe that a joint bid, and then a break-up of the company, would help them avoid regulatory questions about antitrust and competition issues.

Reports say that Asda would take Safeway’s larger suburban stores, while Sainsbury would want the more urban, “high street” units.

The expectation is that this move would allow both companies to be more competitive with Tesco, the UK’s number one chain.
KC's View:
Gee, wasn’t it just a couple of weeks ago that the rumor mill had Asda bidding alone for Safeway, and everybody and his brother was denying that it would happen?

This sounds like a very strong possibility to us. And if it happens, it will be fascinating to see what Tesco’s CEO, Sir Terry Leahy, cooks up as a counter move.