UK: Co-op’s Somerfield buy given green light

By: just-food.com | 20 October 2008

The Co-operative Group's GBP1.6bn (US$2.74bn) takeover of Somerfield has received approval from the UK's competition.

The deal will see the Co-op take its place as the fifth largest grocery retailer, behind Tesco, Asda, Sainsbury's and Morrisons. Following completion of the acquisition, the Co-op will have annual sales of about GBP8bn and an 8% share of the grocery market.

However, the Office of Fair Trading (OFT) stipulated that the Co-op will have to sell at least 126 stores to address competition concerns in local grocery markets.

The OFT said the merger would be "pro-competitive" for the UK supermarket sector, once the disposals were completed.

It said that while there were concerns in 126 local areas, it found no issues at a national level. The competition authority said the enlarged group would act as a stronger national player competing against the "big four" supermarkets.

Welcoming the announcement, the Co-op said the decision "clears the way for the creation of a stronger fifth player in the grocery market. This is good news for consumers and good for competition."

Sectors: Retail

Companies: Somerfield, The Co-operative Group, Tesco, Asda, Morrisons