LONDON, July 28 -- Britains' largest supermarket chain Sainsbury entered the takeover battle for Scottish retailer William Low Thursday by making an offer of 305 pence ($4.67) per share in cash. The bid values the company at 210 million pounds ($321.3 million), 36 percent more than the agreed offer made by its rival Tesco, which valued William Low at 154 million pounds ($235.6 million) or 225p per share ($3.44). Sainsbury is also offering 143p ($2.19) in cash for Low convertible preference shares and a full share alternative to the ordinary offer and convertible preference offer. Sainsbury counterbid had been expected since the company requested information from William Low after Tesco made its offer two weeks ago. The move is atypical for Sainsbury, which has not been involved in a hostile takeover battle before. Chairman David Sainsbury said it was an opportunity for Sainsbury to make its 'quality and low price product ranges more widely available to consumers in Scotland and the north of England'. He said Sainsbury was in the strongest position to unlock the potential of Low's stores. 'Our offer provides a fair price to Wm Low's investors and if accepted will provide a good return on investment to our shareholders,' he said. Tesco, Sainsbury's No. 1 rival, urged William Low shareholders to take no action and said it was considering its response. Sainsbury's move could prompt another offer from Tesco as both companies have been keen to expand in Scotland since their market share north of the border is relatively small.
Sainsbury's market share in Scotland amounts to just 4.9 percent compared to 7.1 percent for Tesco and to 16.5 percent for Scottish market leader Argyll, the owners of Safeway and Presto food stores. William Low has a market share of 6.6 percent. Fierce competition from larger supermarket chains and food discount shops, as well as falling prices in times of recession and changing consumer attitudes, have hit William Low's sales in recent years. A takeover will mean the disappearance of a historic name in the Scottish business scene. William Low was founded in 1867 by two families from Dundee. The target's shares rose another 47p ($0.72) to 327p ($5.0) in afternoon trading on the London Stock Exchange. William Low shares have been rising steadily on expectations of a counterbid from Sainsbury, almost doubling in value from 169p ($2.59) at the close the day before Tesco launched its bid. Tesco was 7p ($0.10) easier at 233p ($3.56), while Sainsbury shares traded unchanged at 410p ($6.27). mjc-acz-e
