Co-op strikes £600m deal to sell petrol stations to Asda to help boost finances
Co-op’s newly-appointed chief executive Shirine Khoury-Haq told PA there are no plans to sell any more of the group’s assets.
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Your support makes all the difference.The Co-operative Group has agreed a £600 million deal to sell its petrol forecourt business to supermarket giant Asda in the latest move to bolster its finances.
The sale will see 5% of Co-op’s entire retail estate – including 129 petrol stations and three development sites – handed over to Asda, which already runs 323 petrol stations across the UK.
Co-op, known for its supermarket chains and funeral care operations, said offloading its petrol forecourts will allow it to focus on its convenience business as well as raising important cash for the business.
Co-op’s newly-appointed chief executive, Shirine Khoury-Haq, told the PA news agency: “Today’s sale will help us to reduce our net debt and improve our financial position, giving us more of a buffer to ride out the current economic waves.
“If we have learned anything over the past couple of years, it is that we cannot predict much in terms of what is coming next.
“We are incredibly optimistic about the future of the business, but we do need to look prudently at the external environment.”
Ms Khoury-Haq added that the money raised will go towards investing in the group’s existing shops and employees, as well as its life services and funeral care operations.
The move will also help Co-op to expand its retail estate with new convenience stores across the UK, the chain said.
The Co-op has offloaded a number of its divisions over the past decade, including its chain of pharmacies and travel shops.
But Ms Khoury-Haq – who was last week appointed as the Co-op Group’s first female boss – told PA there are no plans to sell any more of the group’s assets, beyond keeping an eye on a handful of its underperforming stores.
The deal comes after the Co-op announced last month that it would cut around 400 head office jobs in the face of tough trading conditions worsened by rising inflation.
And in April the firm revealed that annual profits halved following supply chain disruption and higher costs.
For Asda, the move is part of its plans to become “the UK’s second largest supermarket” and to move further into the country’s convenience store market.
Asda will pay £438 million in cash and take on around £162 million of lease liabilities as part of the deal, with the final amount set to be confirmed on completion due in the final quarter of this year.
The supermarket was taken over by the Issa Brothers and TDR Capital last year. It agreed to sell 27 of its forecourts in order to secure the acquisition after the Competitions and Market Authority (CMA) raised concerns.
Issa Brothers and TDR Capital also own EG Group, one of Europe’s largest independent fuel retailers, but it is not reported to have any involvement in the deal between Co-op and Asda.
While the takeover is not conditional on approval from the CMA, Asda confirmed that it is ready and willing to co-operate with the regulator should it choose to pursue investigations.
A spokesman said: “We look forward to discussing the transaction with the CMA. We fully respect the obligations of the CMA to conduct their work and will of course co-operate with them.
“We will let the CMA conduct their work and stand ready to co-operate as necessary.”
Around 2,300 Co-op staff who work across the sites being sold will transfer over to Asda once the deal is complete.
Mohsin Issa, the co-owner of Asda, said: “We see convenience as a significant growth opportunity for the business.
“This acquisition accelerates our strategy in this area and forms part of our long-term ambition to become the UK’s second largest supermarket.”