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Asda has completed the acquisition of 132 forecourts and retail sites from The Co-op to underpin its strategy to enter the convenience retail space.
The acquisition, which was initially announced at the end of August for a cash value of £438m, includes 129 “high-quality” existing sites across the UK with a retail store of between 1,500 and 3,000 square feet and attached petrol stations, and three development sites.
Around 2,300 staff currently employed by The Co-op will move to Asda’s employment under TUPE transfer in the coming months, following consultation with USDAW.
Asda said the deal creates “an exciting new part of the Asda business that brings Asda value to more Asda communities”.
Whilst the sale of the sites has now formally completed and Asda owns the 132 sites, the deal remains subject to regulatory approval from the CMA (Competition and Markets Authority).
The CMA has issued an ‘Initial Enforcement Order’ requiring that the Co-Op sites remain entirely separate from Asda whilst the CMA conducts it investigation into the deal – a process that is expected to take until mid-2023.
During that time the sites will be run separately to the Asda business and only following formal approval of the transaction will colleagues be able to transfer to Asda’s employment and the stores made part of the Asda estate.
Mohsin Issa, co-owner of Asda said; “We are delighted to formally complete the transaction that we announced in August and taking the next step on our journey to creating a new and exciting part of our Asda business.
“As millions of families deal with the day-to-day impacts of increasing costs of living, we’re committed to bringing Asda’s great value groceries and fuel to even more communities across the UK through these new stores. Over the last five years we’ve been consistently ranked as one of the cheapest providers of fuel in the UK and have been voted the Grocer’s best priced supermarket for 25 years in a row – meaning customers in these communities can look forward to saving millions annually on the cost of filling their shopping trolleys and tanks when Asda comes to town.”
“We look forward to working collaboratively with the CMA on their investigation and to welcoming our new Asda colleagues to our great business in the coming months.”
The transaction has a total value of approximately £600m, inclusive of IFRS16 lease liabilities of approximately £162m.
The Co-op, meanwhile, said the sale proceeds will be used to reinvest into its core convenience business, pricing, store operations, technology, and logistics, as well as to further support the reduction of Co-op’s net debt.
Morning update
Pernod Ricard has kicked off a €150m share buyback process as part of the wider €500m-€700m buyback programme announced on 1 September.
The group will undertake to acquire its own shares for a maximum amount of €150m over a period starting on October 31 and possibly extending until 22 November.
The price of the shares purchased under this mandate shall not exceed the limit of €280 per share set by Pernod Ricard shareholders’ meeting held on 10 November 10.
On the markets this morning, the FTSE 100 is down 0.1% to 7,038.7pts.
Early risers include Nichols, up 7.1% to 1,156.2p, Devro, up 3.9% to 185.6p and Hotel Chocolat, up 3.2% to 144p.
Fallers include Premier Foods, down 3.5% to 100.8p, Kerry Group, down 2.2% to 89.4p and PayPoint, down 0.9% to 567p.
This week in the City
The week looks quieter as international reporting season slows down, but the major even of the week will be Sainsbury’s interim earnings release on Thursday.
Sainsbury’s shares were hit last month after rival Tesco said its profits would be towards the lower end of guidance as the cost of living crisis hit margins.
Elsewhere, B&M European Value Retail hosts its AGM later today, but has issued no trading update ahead of the meetings.
Internationally, Mondelez is set to announced Q3 results tomorrow, while Starbucks and Kellogg’s will update the market on full year earnings and Q3s respectively on Thursday. The Hershey Company issues its Q3 results on Thursday.
Today was to be the day of the UK Treasury’s ‘fiscal event’, with the Chancellor updatating on economic strategy and forecasts, but that has been delayed until 17 November.
On Thursday the Bank of England’s Monetary Policy Committee meet to issue their latest judgement on interest rates, with another hike widely expected to attempt to curb inflation.
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