Certain city PROs will have rubbed their hands with glee as the events surrounding the sale of Safeway unfolded last week, developing from a routine agreed bid from Northern chain Morrisons into a takeover tussle involving most of the major food retailers.
As Sainsbury's plunged in last week declaring its interest in launching a potential bid, so its retained agency Finsbury entered the ring, opposite Morrisons' newly hired consultancy Citigate Dewe Rogerson and Safeway adviser Brunswick. Within 24 hours Asda's US parent Wal-Mart confirmed it too was considering joining the throng, adding consultants Bell Pottinger Financial to the PR adviser mix.
At the end of last week speculation grew that US group Kohlberg Kravis Roberts (which uses Penrose Financial for City PR) was set to join the fray. Penrose director Andrew Nicolls explains the scale of the challenge with so many rival bidders: 'Our role is working with the media to ensure the many rumours that arise from such a hotly-contested situation are neither misleading nor misrepresentative of KKR's preliminary discussions.'
The next interested party was Bhs and Arcadia owner Philip Green, who announced he had asked Safeway for financial information and indicated that if the 'deal stacked up, the financing was available'. With advisers Finsbury already battling for Sainsbury's in this deal, a question mark hangs over how Green will handle the media interest in his latest venture.
As PRWeek went to press, even market leader Tesco indicated its intention to look at a bid, aided by PROs from The Maitland Consultancy. The company appears to believe it can overcome regulatory opposition by selective stores disposal.
The deal promises to be the UK's most hotly-contested takeover battle since Vodafone's bid for Mannesman almost three years ago, and heralds a much-needed cash injection for the ailing financial PR market, hit hard by the recent dearth of M&A deals.
Sources say the deal could provide between 25 and 50 per cent of an agency's pre-tax profit. Sums being bandied about in the industry suggest the firms involved could be in line for fees of between £500,000 to £1m. The advisers will, of course, have to work hard for their money. There are a range of issues, audiences and reputations at stake in this contest.
Safeway, as the target, is in an enviable situation. It is the only party involved to see a rise in share price and its price tag gets a hike every time a fresh bidder piles in. Comms director Kevin Hawkins says the bidder normally 'does the talking' while the target 'remains discreetly quiet', but not this time: 'We've been busy explaining the competition issues and the processes the bidders will go through - and, importantly, reassuring 95,000 employees that it's business as usual.'
Hawkins - who has had a bid strategy in place for six months - together with his team and Brunswick, are working to reassure staff and some ten million customers. The goal is to win support for preferred bidder Morrison, but with a duty to get the best price, no offer can be dismissed. The firm is putting Hawkins and chairman David Webster forward as spokesmen, leaving the CEO to continue running the business day-to-day.
In Bradford, Morrison PROs are in overdrive, working 16-hour days to bolster its bid to create a chain to rival The Big Three - Tesco, Sainsbury's and Asda. Morrison believes its is the only offer likely to escape a referral by the OFT to the Competition Commission. But this offer is dropping in value as Morrisons' shares dive, knocking £400m off its original offer of £2.9bn.
An IR blitz is in full swing, with Sir Ken Morrison taking investors and analysts on a tour of existing south east stores. The offensive is unusual for media-shy Morrison. The company, via comms director Gillian Hall, has maintained a good reputation while keeping a low PR profile. Morrisons now needs to be as open and PR-able as possible to win investor support.
For Sainsbury's and Wal-Mart - both yet formally to bid - the comms challenge may boil down to managing regulation. While promises of price cuts will please consumers, market-share-conscious regulators will not be easily won over.
Sainsbury's, which is considering a cash and shares offer of £3 a share, is tight-lipped on its strategy, beyond a statement from head of media Pip Wood: 'As always, communications in its broadest sense will play an important role in informing all our audiences.'
Wal-Mart is more reticent still, declining to comment for this piece.
As its share price drops, IR is proving an important issue, but most of its efforts will be aimed at the regulators. One City PRO with retail clients says: 'There's a lot of smoke and fire out there but, in my view, the battle will be won and lost on competition grounds.' The OFT has received submissions from Morrisons and Wal-Mart and aims to evaluate the bids by March. In terms of consumer and supplier support, round one goes to Morrisons, but Hawkins remains cautious: 'It's an important battle to win and keep winning. Nobody's complacent about the outcome.'
The regulator's decision is anyone's guess and, even with consumer support, the battle is not over.