The Co-op Group has agreed the sale of 298 of its Food stores to McColl’s Retail Group for £117m.
The sale will see all staff transferred over to McColl’s and the stores will continue to trade after the handover, which is expected to take place in November.
The money raised is to be reinvested into the Co-op Group’s strategy of focusing on convenience retailing and strengthening its membership offer.
Steve Murrells, CEO of Co-op Food, said: “The Co-op Food business continues to move forward with a clear momentum and purpose to deliver a compelling and convenient shopping experience for our millions of customers and members.
“Today’s announcement is completely in line with our strategy, as these stores did not allow us to provide a sufficiently compelling own-brand offer for our members going forwards. The proceeds will be re-invested to drive sustainable growth for our members and I’m delighted that all 3,808 colleagues will transfer to McColl’s on the same terms and conditions.”
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The sale is subject to approval from the Competition and Markets Authority and McColl’s shareholders. To help finance the acquisition, McColl’s has announced the placing of 10,460,732 shares to new and existing investors, to help raise approximately £13.1m.
McColl’s currently has 933 convenience stores. Chief executive Jonathan Miller said: “I am delighted to announce the acquisition of 298 quality convenience stores in a transformational deal for McColl’s. This opportunity substantially accelerates our growth strategy and expands our neighbourhood presence for the benefit of our customers.
“These stores are profitable, well invested, and the perfect size for our operating model. We expect the transaction to be significantly earnings enhancing for our shareholders. I look forward to welcoming all of our new colleagues to the business.”
Read more: Co-op Group buys 15 Budgens stores in continued expansion
The Co-op Group’s annual report, released in April, showed that in the year’s trading, 97 new stores had opened, and 91 closed. The underlying profit at Co-op Food was up 3.3% to £250m. Like-for-like growth increased by 1.6%, and in convenience stores that rose to 3.8% growth.
The Group has previously announced its intention to open 100 new stores in 2016.
- A full list of the stores to be sold is available here.
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