The deal propels the Group into the “Premiership” of food retailers with an eight per cent market share and 3,000 stores generating annual sales in excess of £7bn.
The confirmation of the acquisition completes a process which began in 2005 when Group Chief Executive Peter Marks first looked at the possibility of buying Somerfield on behalf of United Co-operatives.
Now, three years on, Mr Marks has seen his ambitious plan come to fruition. He told the News: "This is great news for customers of both The Co-operative and Somerfield. It is a transformational deal which cements our position as the UK’s number one community retailer and returns us to the Premiership of food retailers. It is no longer the Big Four; now it’s the Big Five.
“Our first priority is to start integrating the two businesses — something that will bring real scale benefits, enabling us to provide better value to our customers.
“There is a strong strategic fit between these businesses and we are looking forward to creating a single business combining the inherent strengths of both Somerfield and the Group.”
Added Mr Marks: “The co-operative business model, built on trust and sound business ethics, is experiencing a renaissance as consumers increasingly appreciate the integrity of our brand. The acquisition of Somerfield and the proposed merger with the Britannia Building Society sets us up for an exciting future.”
A Group spokesman said the enlarged food business will be headed by the Group’s Managing Director for Food, Tim Hurrell, and the integration process is set to take up to two years, with the Somerfield brand remaining in some locations throughout that period as stores are gradually converted to The Co-operative brand.
Added the spokesman: “The Somerfield Bristol headquarters will be retained for about 18 months, while all head office functions are moved to Manchester on a phased basis. Relocation opportunities will be offered to as many staff as possible.”
Somerfield Chief Executive Paul Mason commented: “The Co-operative Group is buying a business that is in rude health, with strong, positive like-for-like sales and a profit margin that has doubled since the business became privately owned in 2005.”
The Office of Fair Trading rubber-stamped the acquisition after the Group agreed to dispose of 133 stores in areas where there are competition issues and this process is continuing.
• The Group has said for the seven weeks to February 21st, food store sales were up 6.2 per cent on the corresponding period in 2008, though in its 700 re-branded shops, there was an average 12 per cent increase.