UK supermarket group Wm Morrison has announced that it has agreed to sell a total of 114 smaller-sized Safeway stores and a distribution centre for a total cash consideration of £260.2m (US$479.1m).
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Of these 114 stores, 63 stores, which are mainly leasehold, are being sold to Somerfield Stores for a consideration of £115.0m. The remaining 51 stores, which are mainly freehold, together with the distribution centre at Welwyn, are being sold to Northwharf Investments, a company jointly owned by Barclays Bank Plc and R20 Limited, for a consideration of £145.2m. Morrisons understands that following completion of the purchase, Northwharf will enter into a long-term lease of each property to Somerfield.
Safeway management accounts for the 12 months to 31 March 2004 state that turnover from the stores was £860m (including VAT). Existing staff at all of the stores involved will transfer to Somerfield. In addition, the distribution contract at Welwyn will also transfer to Somerfield.
“This disposal will allow us to concentrate on our area of expertise of running larger stores and will help us to speed up the conversion process. In focussing on the vision of around 350 to 400 large Morrisons stores – and then growing from there – the sale of these 114 Compact Stores means that we will be able to re-engineer our supporting infrastructure and achieve a much greater level of efficiency across our entire supply chain,” said Bob Stott, joint managing director for Morrisons.
Steve Back, chief executive of Somerfield said the acquisition is in line with its strategy of focusing on stores trading less than 15,000 square feet.
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By GlobalData“This acquisition, together with the significant progress this year on our portfolio transformation programme, is further evidence that our stated strategy is being delivered,” he added.
