The CEO of The Co-operative Group, Peter Marks, has not ruled out keeping hold of all of Somerfield if it bought the chain.

The society confirmed this week it was in "serious discussions" to buy the retailer. It was conducting due diligence and, although there was no certainty a transaction would take place, it hoped a deal would be sewn up by summer.

Marks refused to comment on reports that The Co-op Group planned to focus on the smaller Somerfield stores and sell off part of the 900-store estate to rival retailers.

"We are in discussions to buy the whole business," he said.

The society has also said it has the confidence to run larger stores. Speaking exclusively to The Grocer, Guy McCracken, head of food retail, said the society had trialled five 'market town' stores between 15,000 sq ft and 17,000 sq ft for the past year. The stores had delivered double-digit sales growth.

"In the past we didn't really have a solution for our mid-sized supermarkets and had allowed them to wither on the vine," McCracken said. "The trial has given us the confidence to operate bigger stores and we will now increase the pace of refits for this part of the estate."

Marks added he was "very comfortable" that The Co-op Group could integrate Somerfield, pointing to the fact that its merger with United Co-op last July was ahead of plan. In its full-year results this week, the society said it was ahead of its target to deliver 50% of integration projects by mid-2008 and 80% by the end of the year.

He would not comment on the potential impact of the deal on sales densities, but said the society was already improving these, pointing to like-for-like sales growth of 4.6% for the year to 12 January, ahead of Tesco's 3.5% excluding fuel.

Pre-tax profit rose 50.5% to £139.2m on sales up 21% at £3.68bn, boosted by the United Co-op merger and an ongoing £200m refurbishment programme.

Tim Hurrell, who takes over from McCracken in July, said the society was aiming to open 400 new food stores in the next three years.