Asda has agreed to acquire 132 convenience stores from The Co-operative Group (Co-op) for £600 mllion.
Asda said the acquisition is as part of its growth strategy to move into the convenience market and bring Asda value to more local communities.
The purchase includes 129 established, high-quality sites with a grocery retail store of between 1,500 and 3,000 square feet and attached petrol filling station, and three development sites.
They are located nationwide and will create a new and distinct format for Asda in the convenience market.
The transaction is subject to normal conditions and will be financed through a combination of existing cash resources and bank finance.
The circa 2,300 colleagues currently employed in the Co-op stores will transfer to Asda’s employment under TUPE transfer following completion and after a transition period. The stores being acquired as part of the transaction delivered net sales of £863 million and pro forma EBITDA of £53 million for 12 months to June 2022, with potential to grow EBITDA further when development opportunities and other synergies are taken into account.
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.”
The deal has an enterprise value of approximately £600m, which will include a cash consideration of £438m and is also inclusive of IFRS 16 lease liabilities of approximately £162m. Final amount to be confirmed on completion.