THE Wm Morrison supermarket chain has a clear sight of the finish line in its race to buy Safeway - nearly ten months after lodging its initial bid.

Entrepreneur Philip Green's decision to pull out of the takeover battle will have come as a relief to Morrisons.

Safeway executives were hoping the price would be pushed up with the two parties trying to out-bid each other.

Morrisons, which has made no secret of its desire to buy Safeway, has spent this week locked in a bartering process with the Office of Fair Trading over 53 stores identified by the Competition Commission as needing to be sold if the two groups merge.

The outcome of those talks are expected by the end of next week, after which, Morrisons will have 21 days to make a new bid for its rival.

Safeway had hoped Mr Green, owner of Bhs and fashion chain Arcadia, would push Morrisons into adding a cash sweetener to its previous all-shares bid.

Mr Green decided against adding Safeway to his portfolio after discussions with the Office of Fair Trading.

It is thought his interest cooled after discovering that any move to sell some Safeway stores would have needed a separate regulatory inquiry.

Tesco, Sainsbury's and Asda have already been told they cannot buy Safeway stores after being blocked last month from bidding for the chain.

The Competition Commission inquiry cleared Morrisons, while Mr Green was exempt from the investigation.

Analysts are awaiting Morrisons' next move, particularly over the level of its bid. The original offer in January valued the company at £2.9bn, but has since lapsed.

Alex Scott, analyst at Seven Investment Management, said Morrisons needed to be cautious when deciding how much to bid for Safeway.

He said: "They now have to strike a balance between making an offer that will get the job done quickly, or trying to get Safeway more cheaply.

"The risk they take by pitching an offer lower than the one made earlier in the year is that Safeway shareholders might decline. Philip Green or another bidder might be tempted back to the table if Morrisons do pitch it too low."

Morrisons declined to comment.