Morrisons completed its rescue of McColl’s yesterday afternoon, buying the convenience and newsagent chain immediately after it was put into administration by PwC.
Having seen off rival bids from the EG Group, the supermarket will now pay off McColl’s debts of around £170m and take on its 1,160 shops, 16,000 staff, and pension commitments after a lengthy period of uncertainty.
The threat of McColl’s going into administration had raised fears that if a buyer was not found, there could be UK-wide store closures and job losses.
In recent months, McColl’s had been in talks with its lenders and Morrisons for financing to secure its long term future. In March, its Chief Executive Jonathan Miller stepped down after the business endured torrid trading conditions and supply chain issues that impacted its revenue and profit.
Commenting on the deal, Morrisons’ Chief Executive David Potts said: “Although we are disappointed that the business was put into administration, we believe this is a good outcome for McColl’s and all its stakeholders.
“This transaction offers stability and continuity for the McColl’s business and, in particular, a better outcome for its colleagues and pensioners.”
The wholesale agreement between Morrisons and McColl’s will continue without interruption and all sites will continue to trade under the terms of the so-called pre-pack administration.
As well as the wholesale agreement with Morrrisons, McColl’s has converted 270 of its shops to the Morrisons Daily format, which it had said was “fundamentally reshaping the business into a more profitable and sustainable model”. In November, it announced that it would accelerate the number of conversions to 450 within a year.
The rollout is expected to continue and provide Morrisons with a significant presence in the convenience channel to challenge the Tesco Express and Sainsbury’s Local chains.
NAM Implications:
- Whew! Back to business as usual for McColl’s…
- …with added focus on productivity.
- Anticipate some loss of outlets and redeployment of staff.
