Co-op’s long-awaited takeover of Somerfield in final stages

It is believed that the Co-op will complete its long-awaited takeover of Somerfield this week after months of discussions

The £1.6 billion deal will bring substantial payouts to property tycoon, Robert Tchenguiz, who holds a 30% stake in Somerfield, as well other shareholders including Barclays Capital, private equity group Apax Partners and Icelandic-bank Kaupthing.

The deal will transform the Co-operative group into the UK’s fifth-largest grocer, with a market share of 8.3%. Back in the 1960s, the group was well-known for its ‘divi’ card when it became Britain’s largest grocery retailer with around 13 million customer-members.

The Manchester-based group hopes to become the home of Britain’s premier retail brand while Somerfield’s 900 stores will take the Co-op’s portfolio to over 3,100 supermarkets and convenience sites.

Last July, the Co-op merged with United Co-operatives, which brought together Britain’s two most powerful regional Co-op movements.

Former Marks & Spencer executive, Guy McCracken, has re-vamped the Co-op’s food range and has extended the “Grown by Us” label, sourced from the Co-op’s own farmers and introduced a “Truly Irresistible” brand.

According to Greg Lawless of Blue Oar Securities, this transaction should do for the Co-op what buying Safeway has done for Morrisons. Co-op should be boosted back into the limelight.

Tesco is currently the supermarket leader with over 30% of the market with Asda in second place with 16%.

Story link: Co-op’s long-awaited takeover of Somerfield in final stages