Both parties announced the deal this morning following month’s of negotiations, which now makes the Group the fifth largest retailer in the UK with a share of eight per cent and the market leader in convenience stores.
The society’s £1.565bn purchase of the retailer on a cash free debt free basis has led to the acquisition of 880 retail outlets across the UK.
In the year to April 2008 Somerfield generated net sales of £4.2bn, and earnings before interest, tax and depreciation of £233m. At the year end net assets totalled £1.3bn.
The combined food business will operate more than 3,000 grocery stores and generate net sales of about £8bn.
Announcing one of the biggest deals in recent co-operative history, Peter Marks, Chief Executive of The Co-operative Group, said: “This is good news for consumers and for competition in the grocery market where we will create a stronger fifth player in food and a convenience store chain with unrivalled geographic reach.
“For The Co-operative Group this is a transformational deal – cementing our position as the UK’s premier community retailer and helping us significantly as we lead a renaissance of the Co-operative brand. Together, The Co-operative and Somerfield colleagues will be better placed than ever before to provide consumers with great choice, value and service.
“The acquisition of Somerfield will provide the rocket fuel for our three-year growth plan, outlined in April of this year. Under this plan we are revitalising our retail estate under a single unified brand – modernising our stores, improving our product offer and service levels for customers and members and reinforcing our Co-operative difference.
“There is a strong strategic fit between the two businesses, with both focused on the highly competitive top-up and convenience shopping market. We anticipate real cost and revenue synergies, enabling us to enhance still further the overall value we deliver to our customers.
“Given a deal of this nature, there are likely to be some local competition issues. We are confident we will be able to work through these with the Office of Fair Trading.”
Paul Mason, Chief Executive of Somerfield, said: "The Co-operative Group and Somerfield have a similar focus in terms of customers, store types, product ranges and business vision. Our shared vision of providing a high quality and affordable convenience offer to local communities means that together we will be twice as strong and therefore twice as able to deliver the local grocery shops British customers demand.
“Over the last two years we have transformed every aspect of Somerfield, a significant achievement, and as a result we are now trading from a position of strength. With Somerfield and The Co-operative Group as one business we believe that we can learn from each others strengths to ensure we continue to develop the best local grocery shops in Britain.”
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