THIS WEEK IN THE MARKETS

IT was probably the worst-kept corporate secret of the year, but Fitzwilton's link-up with Safeway still represents another upheaval for the Irish supermarket industry, and one that will not be welcomed by either Dunnes Stores or Superquinn, the domestic retailers seen as most at risk by the arrival of Safeway and Tesco.

The attitude in the market seems to be that this represents a better deal for Fitzwilton than Safeway. The British supermarket group will take over the running of the stores being retained in the North and the 20-odd stores that will be developed on both sides of the Border.

In Britain, Safeway generates the highest sales per square foot of any of the multiples and twice what Fitzwilton manages to extract from its Wellworth stores. The success of this joint venture will depend on Safeway's ability to drive up sales in the existing stores and also find the right sort of sites in the Republic where British-style sales returns can be generated.

For Fitzwilton, the immediate cash payment from Safeway puts a much healthier sheen on its balance sheet, and gives the O'Reilly-controlled group the muscle to do big deals. But few in the market expect Fitzwilton to go on an immediate spending spree.

Fitzwilton has done well out of its investment in Wellworth and the shares rose accordingly. Still at 52p, the shares are less than a third of what they were 10 years ago and over the past five years the shares have underperformed the market by over 58 per cent.

The Safeway link-up is a good deal, but Fitzwilton has much further to go before it regains the confidence of the Irish institutions which have largely deserted the share register.

One retailer that institutions would love to see on the market is Musgrave, which reported yet another bumper set of profits, a glowing balance sheet and a major expansion into the North through the purchase of the smaller Wellworth stores.

Not much prospect of a Musgrave flotation, however, the company does not need outside equity. And anyway, Mr Hugh Mackeown has gone on record before as saying that he does not want the nuisance of outside shareholders restricting his room to manoeuvre.

Otherwise it was a pretty dull week, with the Irish market drifting lower as the FTSE got the jitters at the prospect of tax changes in the British budget that might hit institutional investors. Not much in the way of corporate news, with Irish Life's link-up with the South African group Fedsure and the tale of woe at Mackie the few highlights.

The next couple of weeks may finally see some developments in the sale of Woodchester, with four groups being invited to make formal bids after doing due diligence on the financial services group. GE Capital, ATT Capital, ABN-Amro and Woolwich are still seen as likely bidders and a price tag of around £600 million will probably be needed.

Finally, Norwich Union share-holders who bought discount shares will get their share certificates next week. Let the good times roll for our poor deprived stockbrokers.