The new company, called Back to the Future, is lead by Richard Kirk, chief executive of clothing chain Peacocks. He is expected to become a non-executive chairman, while Paul Niklas, former CEO of Formica, will take up the role of chief executive.
Niklas said: “We have a very strong brand name in Kwik Save and we have a set of store locations that generate a large amount of revenue - about £500m.”
In a statement, Somerfield said that the operation of Kwik Save alongside the core business had been unsuccessful and had incurred substantial losses.
It added that a further 77 stores had been sold to other retailers, while 102 stores would be converted to the Somerfield format.
Reports claim that the 77 stores have been purchased by a number of retailers, including Netto, Aldi, Lidl, Iceland, Tesco, Asda and Marks and Spencer.
The Grocer has been following speculation for months that Somerfield could be preparing to offload the Kwik Save brand. In October last year, analysts told The Grocer that Kwik Save would be sold because it had been a “major problem” for Somerfield.