(qlmbusinessnews.com via bbc.co.uk – – Wed, 31st Aug 2022) London, Uk – –
The Co-op has agreed to sell its 129-strong petrol forecourt business to Asda in a deal worth £600m.
The Co-op said the sale of the sites, which represent 5% of its retail estate, would enable it to expand its network of grocery stores and also help it balance the books.
Asda said the purchase was part of plans to move into smaller, convenience grocery stores.
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About 2,300 Co-op petrol station staff will be moved to Asda's employment.
As part of the deal, Asda will pay £438m in cash and take on responsibility for Co-op's lease payments which total about £162m.
The precise figure will be confirmed when the sale is completed later this year.
“This transaction is in line with our strategy to move away from operating petrol forecourts and supports our vision of ‘Co-operating for a fairer world', while building our core leading convenience business,” said Shirine Khoury-Haq, chief executive at the Co-op.
Mohsin Issa, co-owner of Asda, said the supermarket saw convenience stores 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,” he said.
The deal for the Co-op's 129 forecourts include the shops on the sites.
Asda currently has 320 petrol stations across the UK, but the grocery chain is behind in the fast-growing and profitable convenience store business, where Sainsbury's Local and Tesco Express have grown rapidly.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said although Asda was expanding its petrol forecourt numbers, the supermarket would be “more focused on reaping rewards from added grocery sales, rather than fuel revenues”.
“Forecourt shops are not now seen simply as petrol stations but rather as convenience stores which sell fuel,” she added.
“Asda sees significant potential in adding a raft of new shops to its retail portfolio, especially given that industry data shows that there has been a 12% increase in average weekly spend at forecourts compared to a year ago.”
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Britain's third-largest supermarket chain was bought by the Issa brothers in February 2021; the two entrepreneurs from Blackburn made their billion-pound fortunes running petrol stations.
Co-op Group – which owns supermarket chains and funeral care operations – has offloaded a number of its divisions over the past decade, including its chain of pharmacies and travel shops.
