Co-op completes £600m sale of petrol forecourts to Asda
The Co-operative Group has completed the sale of its petrol forecourt business to its supermarket rival Asda for £600m, saying the money will be reinvested in its grocery stores, keeping prices down and reducing debt.
The group, known for its supermarket chains and businesses including a funeral service, had agreed to sell its 129 petrol stations to Asda in August 2022.
“Sale proceeds will be used to reinvest into Co-op’s leading core convenience business, pricing, store operations, technology, and logistics, as well as to further support the reduction of Co-op’s net debt,” the company said on Monday.
The sale will result in 5% of Co-op’s retail estate, including the 129 petrol stations with grocery stores attached located across the UK and three development sites, being rebranded and folded into Asda, which already runs 323 petrol stations across the UK.
The brothers Mohsin and Zuber Issa and their private equity partner TDR Capital, who co-own the petrol station operator EG Group, bought the Asda supermarket chain and its filling stations in 2021.
The brothers already own about 700 forecourts, making them a significant player in Britain’s network of more than 8,000 petrol stations. The sale will result in 450 sites operating under the Asda brand.
The Co-op said it planned to open more convenience stores, and keep grocery prices competitive, also improving its technology and logistics.
The retailer has an annual revenue of about £11bn but in recent years it has been battling to control soaring debts, which rose to £920m according to its most recent results, up from £695m in 2019 and £550m in 2020.
In July, the group announced it was cutting 400 jobs at its Manchester head office in the face of tough trading conditions worsened by rising inflation.
About 2,300 Co-op staff who work across the sites being sold will transfer over to Asda once the deal is complete. The Co-op has a total workforce of about 63,000 people.
Mohsin Issa said in August the stores presented a “significant growth opportunity for the business”. He added: “We are hugely excited to create this new and distinct part of our business, giving us the opportunity to bring Asda value in fuel and groceries to even more customers and communities across the UK.”