Asda has completed the acquisition of 132 forecourt retail sites from the Co-op two months on from announcing the £438m deal.
The move is part of Asda’s strategy to enter the convenience channel, which saw it announce earlier this month that it was launching a separate standalone convenience store format.
The Co-op acquisition includes 129 existing petrol stations across the UK with a retail store of between 1,500 and 3,000 sq. ft., and three development sites.
The circa 2,300 staff currently employed by the Co-op will move to Asda’s employment under TUPE transfer in the coming months.
However, whilst the sale of the sites has now been formally completed, the deal remains subject to regulatory approval from the Competition and Markets Authority (CMA). It has issued an ‘Initial Enforcement Order’ requiring that the Co-op sites remain separate from the Asda business whilst regulators conduct an investigation into the deal – a process that is expected to take until mid-2023.
“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,” said Mohsin Issa, co-owner of Asda.
“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 Co-op is planning to use the proceeds from the sale to invest in its core convenience stores, pricing, operations and reducing its debt burden.
“This transaction is in line with our strategy to move away from operating petrol forecourts and supports our vision of Co-operating for a fairer world while building our core leading convenience business,” said Co-op Chief Executive Shirine Khoury-Haq.
NAM Implications:
- The CMA requirement that Asda keep the Co-op acquisition separate from the Asda business until mid 2023 means that Asda cannot access the advantages of scale in negotiation…
- …at a time when the cost of their borrowing is rising fast i.e. additional pressures on Asda.
- Anticipate this additional pressure being reflected in negotiations…
