Operation market garden

9 January 2003 By Rob Cox Follow @rob1cox

It’s not a buyonegetone free bargain. But the deal does stack up financially for Morrison. The question is whether the company which has never done deals can achieve the cost savings it promises.

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Wm Morrison Supermarkets agreed to pay £4.2bn in stock and assumed debt for Safeway, expanding the Bradfordbased grocery chain's reach in southern England and Scotland.

The combined group will hold a 16% market share. Safeway shareholders will own 47% of the new company.

Morrison is offering 1.32 of its own shares to Safeway shareholders, valued at 277.5p at Wednesday's close, and representing a 30% premium. That values the equity at £2.9bn. Safeway has about £1.3bn of debt. Morrisons has £160m of net cash.

ABN Amro advised Morrison. HSBC and Citigroup advised Safeway.

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