Co-op passes regulatory hurdle on Somerfield
THE Co-op said today it was on track to complete its £1.5bn swoop for Somerfield early next year after crossing a major hurdle towards winning regulatory approval.
The Manchester-based group has agreed to sell 24 stores where the Office of Fair Trading ruled there was a local competition issue, and required then to be sold ahead of the deal going ahead.
Yesterday the Co-op revealed it had sold 38 stores to Morrisons for £223m -including four from the OFT’s ‘up front list’. Musgrave, the owner of the Londis and Budgens brands, is buying seven stores, Tesco six, Spar six and Lidl one.
The Co-op must also sell a further 109 stores, including sites in New Mills, Stockport, Mold, Buckley, Royton, Garstang and Bolton. Some of this number are sure to be included in yesterday’s Morrisons deal, although this was not disclosed.
A statement said: “The Co-operative Group and Somerfield have entered into conditional agreements with a number of major retailers to deliver the first stage of store disposals required by the OFT in those local markets likely to suffer a reduction in effective competition as a consequence of the group’s impending acquisition of Somerfield.
“Purchasers have been lined-up for stores in all 24 locations where the group and Somerfield agreed to find ‘up-front buyers’ to enable the OFT to move to finalising its clearance of the acquisition.
A spokesman added: “There is considerable interest in the portfolio of stores that the OFT has required us to sell. We have made excellent progress in securing the “up-front buyers” and this keeps us on track to complete the deal in the first quarter of next year.”
The group, which in July announced record profits and said its convenience stores were thriving despite the credit crunch, will update on trading in mid-January.
