Wellworth on verge of £100m Safeway deal

THE deal which may see the British supermarket giant Safeway inject up to £100 million sterling into Fitzwilton's Wellworth subsidiary may be completed within the next two weeks and may be the forerunner of an aggressive move into the retail market in the Republic.

A spokesman for Fitzwilton would not comment but it is thought that negotiations on the structure of the joint venture are progressing and that a deal may be completed by the middle of the month. Fitzwilton has already said it sees a move into the Republic as the logical step from a situation where future growth in its core Northern Ireland market is seen as limited.

The Fitzwilton spokesman would make no comment on reports from London that the Safeway-Wellworth's combination plans a major rationalisation of its chain of stores in Northern Ireland and up to 10 major stores in the Republic at the upper end of the market.

If this is the case, it suggests Safeway-Wellworth's will be going after the market occupied by Superquinn and the Tesco-owned Quinnsworth rather than the lower end of the market where Dunnes Stores and the Tesco-owned Crazy Prices are market leaders.

The Fitzwilton spokesman also would not comment on reports that the joint venture plans to sell off the bulk of its smaller outlets in Northern Ireland, mainly located in town centres, and concentrate on 12 larger out-of-town stores. If the joint venture does decide on this sort of rationalisation, it is likely that some of the town centre stores will be bought by symbol groups such as Spar and Mace, as well as the Musgrave-owned Supervalu.

Opening 10 large stores on greenfield sites in the Republic would represent a major investment by the joint venture but would allow Safeway-Wellworth focus its attention on specific affluent areas where it could mount a strong campaign against Quinnsworth and Superquinn stores in those areas.

After Fitzwilton announced its annual results earlier this year, chief executive, Mr Kevin McGoran said: "We have to look south and we believe that there is room for us in the market in the Republic. Wellworth would be the family store, carrying food and non-food items even to the extent of carrying leisure and entertainment lines like CDs and videos."

The arrival of Safeway, with its huge buying power, so soon after the Tesco takeover of Quinnsworth/Stewarts/Crazy Prices for £630 million would have a major impact on the Irish retail market.

In Britain, Safeway has concentrated on large out-of-town developments and there are suggestions that the Quarryvale complex on the Lucan Road could be one target for the joint venture.