Co-op nets £223m in stores sale

THE Co-operative Group today netted £223m through the sale of 38 stores to rival Morrisons.

The deal follows the Manchester-based giant’s record £1.5bn swoop on Somerfield this year. To get regulatory approval from the Office of Fair Trading the Co-op needs to sell some of the Somerfield stores.

In October the Office of Fair Trading said the Co-op, led by chief executive Peter Marks, had offered to dispose of stores to resolve competition concerns raised by the merger in 126 local grocery markets.

It said that while the deal “would not give rise to competition concerns at a national level” but there were some local issues to be resolved.

In relation to the 126 local markets it said: “The majority of problematic local areas affected by the merger arise because the Co-op and Somerfield compete closely against one another in the local area concerned.

“A minority of problem areas arise because the Co-op will replace a Somerfield supermarket with its own store in an area where one of the few other locally competing stores is a regional co-operative and therefore linked to the Co-op through membership of the same buying group.”

The deal with Bradford-based Morrisons is conditional on the OFT giving the green light to the Co-op to complete the Somerfield takeover.

A statement from Morrisons said: “The acquisition is conditional upon a successful completion of the Co-operative Group’s acquisition of Somerfield and certain competition approvals.”

Morrisons chief executive Marc Bolland – who revealed an 8% hike in like-for-like sales in the last quarter – said the new stores would fit within its existing portfolio of 150 smaller stores and add more than 500,000 sq ft of additional selling space..

Morrisons will spend another £98m to refurbish and integrate the stores into its chain.