Co-op sells petrol forecourt estate to Asda in £600 million deal
The group said the move will allow it to focus on its core convenience proposition while strengthening its balance sheet.
The transaction includes 129 petrol forecourt sites with grocery retail shops of between 1,500 and 3,000 square feet. This represents 5% of Co-op’s retail estate of 2,564 stores. Asda said the purchase will create a new and distinct format for its business in the convenience market.
Asda will pay £438 million in cash for the assets and take on around £162 million of lease liabilities
Co-op will use the proceeds from the sale to invest in its core convenience business and grow its wholesale, franchise and ecommerce operations. It will also invest in pricing, store operations, technology and logistics and reduce its net debt.
Shirine Khoury-Haq, chief executive of the Co-op, said: “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.”
The 2,300 staff members currently employed in the Co-op stores will transfer to Asda’s employment under TUPE transfer following the sale’s completion and a transition period.
Mohsin Issa, co-owner of Asda, said: “We have always been clear in our ambition to grow Asda and are hugely excited to create this new and distinct part of our business, giving us the opportunity to bring Asda value in fuel and groceries to even more customers and communities across the UK.
“We see convenience as a significant growth opportunity for the business. This acquisition accelerates our strategy in this area and forms part of our long-term ambition to become the UK’s second largest supermarket.”