Morrisons' £3bn Safeway deal to spark price war

William Morrison's £3bn takeover of Safeway looks set to fuel a supermarket price war among the industry's major players, as Tesco and Sainsbury's prepare to unleash new-year marketing blitzes.

The Morrisons' offer for Safeway, which will create the UK's third-biggest grocery retail group, was announced on Monday, with a pledge from Sir Ken Morrison to scrap Safeway's promotional pricing strategy in favour of the group's everyday low pricing (EDLP) approach.

Tesco plans to continue the value-led advertising through Lowe that has seen it extend its leadership of the UK grocery market in 2003.

A Sainsbury's spokeswoman said Morrisons' takeover of Safeway would give the chain an opportunity to communicate the Sainsbury's brand more distinctively.

"We will focus on a combination of the value and quality of products, and there are plans for significant marketing investment," she said.

Sainsbury's will be pushed into fourth place in the UK market by the Safeway deal.

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