According to reports out of London, Wal-Mart's been buttering up Safeway's top shareholders in an effort to grab a substantial piece of the company.
Under curious U.K. governmental rules, Wal-Mart is the only bidder still allowed to buy Safeway shares, and the retailer's taking advantage of the opportunity. It reportedly approached several of the top 10 shareholders, which collectively own 54% of Safeway, offering a premium for their shares. Wal-Mart would need a 29.9% stake in the company to fend off a takeover.
Wal-Mart's window for buying up shares will soon shut, once British antitrust regulators begin their expected inquiry into the company's bid next week. Wal-Mart, along with at least two of the other Safeway suitors, is likely to be subjected to a months-long investigation. If the company doesn't succeed in wooing shareholders, its entire fate will rest with regulators, who must approve its bid.
British supermarket firm William Morrison still faces the fewest regulatory hurdles in the quest, and that's the bid Safeway itself purportedly supports. However, the possibility of purchasing a big stake in Safeway while also providing a generous all-cash offer to buy the entire company makes Wal-Mart a formidable competitor. Heck, just the all-cash bid and Wal-Mart's deep pockets make it a player.
For now, the situation's still in the hands of the government, as much as Wal-Mart wishes it weren't.