The Co-operative Group will have to sell off a number of Somerfield stores to allay competition concerns in the wake of its planned GBP1.6bn (US$3.2bn) takeover of the convenience retailer, its chief executive told just-food today (16 July).
However, Peter Marks insisted it was “premature” to speculate over how many stores will have to be offloaded once the UK’s competition watchdog, the Office of Fair Trading, studies the effects of the proposed deal.
“We do recognise that the OFT will identify some competition issues in some local areas,” Marks said. “It will take a few months. Obviously, we want it completed as soon as possible but we do recognise that the OFT has a job to do.”
The Co-op’s proposed acquisition of Somerfield was announced this morning after months of talks between the two sides.
Somerfield, which runs around 880 outlets in the UK, was put up for sale in January by a consortium of owners including property tycoon Robert Tchenguiz, Apax Partners and Barclays Capital.
The Co-op emerged as the only suitor to make a formal bid for the business in April and, as talks between the two companies rumbled on, speculation mounted that other UK retailers could pounce for any Somerfield stores sold off after the takeover.
Marks hailed the Co-op’s move as “a cracking deal” that will strengthen the business and boost competition in the UK grocery sector.
The combined business will run around 3,000 stores and command about 8% of UK grocery sales.
In the 1960s, the Co-op was the UK’s largest food retailer and Marks added: “The Co-op is going through a renaissance, it’s an iconic brand and we’re taking it back where it belongs.”
Look out for a full-length interview with the Co-op chief executive Peter Marks on just-food later this week.