THE Co-operative Group has confirmed for the first time that is trying to buy the Somerfield chain of food stores in a deal worth at least £ 1.5 billion.
Group Chief Executive Peter Marks told thenews.coop that, despite intense media speculation to the contrary, no agreement has yet been reached with Somerfield's owners, a consortuium comprising Tchenguiz, Apax and Barclays Capital, and if the asking price is deemed to be too high, then the Group will walk away.
However Group executives remain confident that a deal can be done and an upbeat Mr Marks believes the proposed acquisition will help reinvigorate the entire co-operative retail sector.
Said Mr Marks: "It's true that we are in serious talks with Somerfield. We see it as a great opportunity; it represents a very good strategic fit – but we have a lot of work to do yet and we'll only buy it if the price is right.
"We are in a very good place at the moment and have had a great start to 2008. The first quarter is significantly ahead of plan, so our success is continuing."
Mr Marks said due diligence procedures were already under way, but forecast that it would be the summer before the potential deal would be finalised one way or the other.
"There's a lot of negotiating still to be done and a lot of due diligence to be done and, of course, any decision is subject to the board's approval," he said.
He refused to comment on press reports linking the Group with three big high street banks – Lloyds TSB, Barclays and RBS – in an attempt to finance the proposed acquisition and said that if the deal were to be completed, the figure would be nearer the £ 1.5 billion mark than the £ 2 billion suggested by some media commentators.
"We are a financially disciplined business, therefore if we can do a deal that's right for the business, then we'll do it. If we can't, then we won't," said Mr Marks.
*Further coverage in the next edition of Co-op News, available from April 29th.