Morrisons has confirmed it is selling 140 M Local convenience stores to a team of investors led by Mike Greene and backed by Greybull Capital for about £25m in cash.
Following the deal, the retailer will be left with just five M Local stores, which it said were either on forecourts or would be converted to small Morrisons supermarkets.
Morrisons expects to incur a loss on disposal of about £30m. In addition, it could face liabilities of up to £20m in the future because it retains a guarantee on individual lease obligations, which could revert to it if the Greene/Greybull business does not prove successful.
CEO David Potts said Morrisons had learned much from its convenience business but M Local had ultimately proved “unable to scale. “
He added: “However, we remain open to other opportunities in convenience in the future. I would like to thank all the Morrisons colleagues for their hard work and dedication to M Local.”
Stores to be branded My Local
The new team plans to develop the chain as an ”independent and profitable” business, rebranded under the name ‘My Local’, with a renewed commitment to the communities and customers it serves.
“We are delighted to have reached agreement with Morrisons to acquire its convenience stores. The convenience sector continues to grow ahead of larger supermarkets as people’s hectic lifestyles increasingly lead them to favour more frequent, smaller and top-up shops,” said Greene.
”We are inheriting a set of good stores with highly trained teams of colleagues. With a new strategy tailored to the convenience sector, ‘My Local’ is confident of a profitable and sustainable future.”
The network employs around 2,300 people. There will be no store staff redundancies as a result of the proposed acquisition and up to 200 new jobs will be created as management re-opens 10 stores that are currently closed, it said.
“We are committed to the people who already work in the stores and we want to grow the business with them. We believe that their potential, combined with the expertise of our leadership team, will give us a distinct advantage in the sector,” added Greene.
Subject to successful completion, the senior management team will become shareholders in the new business. They will have a significant holding alongside majority shareholder Greybull Capital.
Greybull partner Nathaniel Meyohas said: “We are delighted to acquire Morrisons’ convenience store estate and we have every confidence that it will thrive under the leadership of Mike Greene and his highly experienced team. We are grateful for Morrisons’ support in completing this transaction to the benefit of all parties.”
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