The mooted tie-up between Morrisons and Costcutter moved a step closer today after Bibby, which owns Costcutter, announced a deal to manage five Morrisons depots.

The contract means Bibby Distribution will manage Morrisons’ regional consolidation centres in Yorkshire, the East Midlands, the South East, Staffordshire and the South West. Yorkshire and the East Midlands will start operations in the next three months.

The deal comes just weeks after The Grocer revealed Morrisons had held exploratory talks with Costcutter to gain a proper foothold in the convenience sector.

“This is a strategic business win for Bibby Distribution with a well-respected, forward-thinking retailer,” said Bibby Distribution chief executive Iain Speak.

“We look forward to starting off with this significant consolidation initiative and further developing our relationship and business with Morrisons over the coming years.”