The Co-op Grouphas sold 298 of its smaller food stores in a £117m deal to convenience retailer McColls as part of the mutual’s turnaround strategy.
Earlier this year the Co-op hired advisers at investment boutique Rothschild to find prospective buyers for the shops, which equate to nearly 10pc of its estate, to raise funds for investment in the rest of its stores.
The deal, which requires approval from McColl’s shareholders and the UK’s competition watchdog, will boost McColl’s portfolio of 933 stores at a time of intense competition for high street sites from supermarkets looking to grow their convenience shops.
The fast-growing convenience sector has been valued at £37.7bn as an increase in time-poor shoppers spurred the opening of two new stores a day last year.
McColls chief executive Jonathan Miller said: These stores are profitable, well invested, and the perfect size for our operating model. We expect the transaction to be significantly earnings enhancing for our shareholders.”
Co-op Food boss Steve Murrells said that the sale was completely in line with our strategy, as these stores did not allow us to provide a sufficiently compelling own-brand offer for our members going forwards.
The proceeds will be re-invested to drive sustainable growth for our members and I’m delighted that all 3,808 colleagues will transfer to McColl’s on the same terms and conditions.”
The Co-op has been reshufling its store estate. In May it shed around 100 former Somerfield properties to restructuring firm Hilco, which included 36 loss-making shops and 60 empty stores. Last week the Co-op bought six stores from My Local, the convenience retailer that collapsed into administration.
In May the Co-op launched a major overhaul of its branding and membership structure as part of its attempts to rebuild its battered reputation.
The Co-op has brought back its distinctive blue cloverleaf” design logo, which was phased out more than three decades ago, as part of efforts to return the company to its core ethical values.