The Co-operative Group has agreed to buy rival retailer Somerfield for £1.57bn. The deal will strength the Co-op’s position as the UK’s fifth largest food retailer with an 8% market share.
The Co-op, a mutual with 2.5 million members, will add Somerfield’s 880 local retail outlets to its portfolio, creating a group with more than 3,000 outlets. The cash-free and debt-free deal is subject to regulatory approval and it may look to sell off some outlets.
Peter Marks, chief executive of The Co-operative Group, says: “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 an unrivalled geographic reach.”
He adds that it is a “transformation deal” for the group that will add “rocket fuel: to its three-year growth plan. The strategy aims to bring all of its businesses together under one unified brand and to modernise its store and product offering.
Somerfield chief executive, Paul Mason, says: “Over the last two years we have transformed every aspect of Somerfield, and as a result we are not trading from a position of strength. With Somerfield and The Co-operative Group as one business we believe that we can learn from each other strengths.”
In the 12 weeks to the middle of June, the Co-op had a 4.4% share of the UK grocery market, with Somerfield accounting for 3.7% (TNS).