Asda to buy Co-op stores
ASDA owners, the Issa brothers, have struck a £600 million deal with the Cooperative Group, as they continue to expand their business.
Under the deal, Asda will take over 132 sites from the Co-op as part of its strategy to move into the convenience market. The purchase comprises 129 established sites with grocery retail stores and attached petrol filling stations and three development sites. The sites are located across the UK.
The deal – £438 million in cash and £162 million in lease liabilities – accounting for five per cent of Co-op’s retail estate, is expected to be completed by the end of the year, a report said.
Leeds-headquartered Asda said the transaction would be financed through a combination of existing cash resources and bank finance.
Some 2,300 people currently employed in the Co-op stores will be transferred to Asda after the formal completion of the acquisition.
Asda co-owner Mohsin Issa said the deal would help Asda reach more customers and communities across the UK.
“We have always been clear in our ambition to grow Asda and are hugely excited to create this new and distinct part of our business,” he said after reaching the purchase agreement with the Co-op Group. “We see convenience as a significant growth opportunity for the business”, he said adding that the acquisition “forms part of our long-term ambition to become the UK’s secondlargest supermarket.”
Co-op chief executive Shirine Khoury-Haq said the deal was part of the British consumer co-operative’s strategy to move away from operating petrol forecourts.
The Issa brothers – Mohsin and Zuber – who built their retail empire starting with just a fuel station in 2001, acquired Asda from Walmart in a £6.8 billion deal. The EG Group, also co-owned by the siblings and TDR Capital, bought out Britain’s second-largest bakery chain Cooplands last year for an undisclosed amount.