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The chain was founded in 1962 by Safeway from the USA but was spun off and sold by Kohlberg Kravis Roberts, or KKR (which acquired the American parent company) in 1987 and listed on the London Stock Exchange as Safeway plc. After some unprofitable years in the late 1990s it recovered with a program of store refurbishments. In 2002 it had the fourth largest supermarket sales in the UK. However after perceptions that it was growing more slowly than other large UK chains and with a low share price, various takeover rumours circulated during 2002.

On January 9, 2003, the much smaller Wm Morrison Supermarkets made an offer to purchase the chain, offering 1.32 new Morrison shares for each Safeway share, with the cooperation of the Safeway board. However this served only to start a stampede of other potential buyers: J Sainsbury plc, ASDAThis article is about the supermarket chain, for other meanings, see ASDA (disambiguation) ASDA is a chain of supermarkets in the United Kingdom offering food, clothing and general merchandise products. The name is a contraction of Associated Dairies and / Wal-MartWal-Mart Stores, Inc. is the world's largest retailer and the largest company in the world based on revenue. In the fiscal year ending January 31, 2004, Wal-Mart had $256. 3 billion in sales and $8. 9 billion in income. Forbes magazine points out that if, KKR (which would have been the second involvement), Trackdean Investments Limited (controlled by Philip GreenPhilip Green is a British billionaire businessman who owns some of the United Kingdom's largest retailers including British Home Stores, and the Arcadia Group. More recently he has launched a takeover bid for the UK's premier retailer, Marks and Spencer., owner of BHS and Arcadia ) and Tesco all said they were considering making offers.

They were all asked to make submissions to the Office of Fair Trading (OFT) for approval under the Fair Trading Act 1973 . On January 23January 23 is the 23rd day of the year in the Gregorian Calendar. There are 342 days remaining, 343 in leap years. Events 1556 The deadliest earthquake in history kills 830,000 people in Shanxi Province, China. 1570 The assassination of regent James Stewa Safeway's board dropped its recommendation of the Morrisons offer. Kohlberg Kravis Roberts later dropped its proposal. On March 19March 19 is the 78th day of the year in the Gregorian calendar (79th in leap years). There are 287 days remaining. Events 1279 Mongolian victory in the Battle of Yamen ends the Song Dynasty in China. 1687 The men under explorer Robert Cavelier de La Salle the remaining proposals except for Trackdean's (which was said to raise no competition issues) were referred to the Competition CommissionThe Competition Commission is an independent body responsible for investigating mergers, market shares and conditions and the regulation of UK companies. The Commission replaced the Monopolies and Mergers Commission on April 1 1999. The Commission has no by the Trade and Industry Secretary, Patricia Hewitt. The report of the Competition Commission was made public on September 26. A takeover of Safeway by Sainsbury, ASDA or Tesco was "expected to operate against the public interest, and should be prohibited". However a takeover by Morrisons was held to be acceptable on the condition that 53 stores of the combined operation be sold, due to local competition issues. Patricia Hewitt accepted these recommendations.

Philip Green announced on 30 October that he was not proceeding with a takeover bid, on the basis that it was not clear whether approval could be obtained to sell off individual stores to other chains. On 15 December, Morrisons, the only remaining bidder, made a new offer of 1 Morrisons share plus 60 pence for each Safeway share, again with the cooperation of the Safeway board. On 11 February 2004 shareholders of both Wm Morrison and Safeway voted to approved the merger of the two companies, subject to the result of two High Court rulings later in the month.

On 8 March, 2004 the takeover by Morrisons was completed. Morrisons plans to rebrand the supermarkets under its own name and the convenience stores as "Safeway Compact". The number of stores to be sold has been reduced by 1 to 52. John Lewis Partnership purchased 19 to be part of its Waitrose chain, while J Sainsbury plc purchased a further 14, and Tesco bought ten in October 2004.

In July 2004, Morrisons shocked the stock market with its first ever profits warning, largely caused by falling sales at Safeway stores. Three stores each week are currently being converted, however, with sales up more than 20% at those opening under the Morrisons fascia. It is now envisaged that full assimilation of the Safeway assets will take 3-4 years, as opposed to the 1 year that had been suggested.

In late 2004 it was announced that the smaller style 'Safeway Compact' stores were to be sold off to rival supermarket chain Somerfield. One of the main reasons was due to the Morrisons way of business, that preferred larger stores while Somerfield is known more for smaller stores.