Co-op sells 300 food stores for £117m
The Co-op Group has agreed the sale of 298 of its smaller food stores to McColl’s for £117m.
The sale of the stores, which are 1,700 sq ft on average, forms part of the group’s strategy of refocusing its food retail business on convenience and own-brand led shopping.
Co-op said the proceeds will be re-invested to further deliver this strategy, which over the past 12 months has seen it become the most frequently visited food retailer in the UK, as its advertising strapline says, ‘Little, Often’.
In the last two years The Co-op has opened around 200 new stores and in 2016 is actively pursuing 100 new store acquisitions. It delivered like-for-like sales growth in its convenience estate of 4% in the year to April.
Steve Murrells, chief executive of Co-op Food, said: “Today’s announcement is completely in line with our strategy, as these stores did not allow us to provide a sufficiently compelling own-brand offer for our members going forwards.”
The stores within the portfolio offer a range of neighbourhood services: for example, the stores have PayPoint, 38 stores contain post offices and 252 stores have on-site ATMs. In 2015, the average weekly sales per store in the portfolio was around.£22,800 and the average basket value was £4.98.
The deal is transformational for listed convenience and newsagent operator McColls, which currently has 1,366 convenience and newsagent stores, branded McColl’s, Martin’s and RS McColl and is also the largest operator of Post Offices in the UK.
The consideration represents more than 80% of McColl’s current market capitalisation and it raised £13.1m before expenses through a share placing to help fund the acquisition.
Jonathan Miller, chief executive of McColl’s said: “This opportunity substantially accelerates our growth strategy and expands our neighbourhood presence for the benefit of our customers.
“These stores are profitable, well invested, and the perfect size for our operating model. We expect the transaction to be significantly earnings enhancing for our shareholders.”
Subject to approval from the CMA and McColl’s shareholders, it is expected to take over the trading stores, including around 3,800 staff, from November.
