Asda has confirmed it will purchase the Co-op's forecourt business in a multimillion pound investment deal that is part of its growth strategy.
The supermarket chain reached an agreement to purchase 132 sites from the retailer for £60million in a bid to further their move into the convenience market.
The transaction will include 129 sites with petrol stations attached, which currently makes up about 5% of The Co-op's retail portfolio, plus an additional three development sites. About 2,300 Co-op staff members will be transferred to Asda's employment following the transaction.
It will also see Asda invest in pricing, store operations, technology, and logistics and support the reduction of Co-op’s net debt.
The new stores will be located nationwide and will create a new and distinct format for Asda in the convenience market.
The deal comes after The Co-op announced it would be cutting 400 head office jobs following a tough trading season that was impacted by the rising rate of inflation.
As part of the deal, Asda will pay £438m in cash and take on responsibility for Co-op's lease payments which total about £162m, reports BBC News.
The final amount - which will be confirmed when the purchase is complete - will be funded through a combination of existing cash resources and bank finance.
Co-op CEO Ms Khoury-Haq said that the deal with the supermarket chain will help the retailer to reduce their debt levels and "improve their financial position".
Asda has said that the purchase is part of their strategy to move into the smaller convenience stores which represents a "significant growth opportunity for the business".
The supermarket giant - which is now owned by billionaire brothers Mohsin and Zubar Issa - already has a growing convenience format with their 'On The Move' stores, with the first Scots store opening in Livingston earlier this year.
Since the brothers purchased the supermarket from Walmart back in 2021, they have been moving into the convenience market to help bring its store products to more local communities.
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.
"We look forward to welcoming the Co-op colleagues to this new part of our business after we complete the transaction and due processes in the coming months.”
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