The Co-operative Group buys Somerfield

The Co-operative Group has announced that it will acquire Somerfield for £1.565bn on a cash free debt free basis.

Somerfield operates 880 stores nationwide, creating a total of over 3,000 grocery stores operated by the combined food business. This will generate net sales of about £8bn, making it a market leader in convenience food retailing and the fifth largest food retailer in the UK with a market share of approximately 8%.

Both the Co-operative and Somerfield presently operate stores in Twydall, with Somerfield operating a petrol station at Cornwallis Roundabout and the Co-operative operating a recently-revamped convenience store in Twydall Green (pictured).

Peter Marks, the Chief Executive of the Co-operative Group, which is run democratically by its 1.5 million or so members (who all paid just £1 to join) and had 87,000 employees in 2007, 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.

Paul Mason, the Chief Executive of Somerfield, which in the year to April 2008 Somerfield generated net sales of £4.2bn and earnings before interest, tax and depreciation of £233m, 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 other’s strengths to ensure we continue to develop the best local grocery shops in Britain.

John Hannett, the General Secreatary of the Union of Shop, Distributive and Allied Workers, which represents workers from both parties, welcomed the move, saying:

Usdaw welcomes the planned acquisition of Somerfield by the Co-operative Group. We represent members in both companies and look forward to playing a full part in the discussions on the process of integration.

The Co-operative Group is a progressive employer, which endorses the consultation and negotiation process with Usdaw as being the best way of ensuring that its employees are given a fair, safe workplace and a real voice at work.