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| Co-op buys Somerfield for £1.57bn | Co-op buys Somerfield for £1.57bn |
| (about 1 hour later) | |
| The Co-operative Group (Co-op), the UK's fifth largest supermarket chain, has agreed to buy rival Somerfield. | The Co-operative Group (Co-op), the UK's fifth largest supermarket chain, has agreed to buy rival Somerfield. |
| The Co-op said the £1.57bn ($3.1bn) purchase would strengthen its position in the UK retail market. | |
| Manchester-based Co-op, a mutual outfit run on behalf of its 2.5 million members, also said the deal was done on a cash-free and debt-free basis. | Manchester-based Co-op, a mutual outfit run on behalf of its 2.5 million members, also said the deal was done on a cash-free and debt-free basis. |
| With more than 4,300 UK retail outlets, it employs 85,000 people. Bristol-based Somerfield has about 900 stores. | With more than 4,300 UK retail outlets, it employs 85,000 people. Bristol-based Somerfield has about 900 stores. |
| The latest figures from research firm TNS, show that in the 12 weeks to the middle of June, the Co-op had 4.4% of the UK grocery market, and Somerfield 3.7%. | The latest figures from research firm TNS, show that in the 12 weeks to the middle of June, the Co-op had 4.4% of the UK grocery market, and Somerfield 3.7%. |
| Stores sell-off? | Stores sell-off? |
| Somerfield is owned by a consortium that includes private equity firm Apex, Barclays Capital and property magnate Robert Tchenguiz. | Somerfield is owned by a consortium that includes private equity firm Apex, Barclays Capital and property magnate Robert Tchenguiz. |
| Supermarket share Tesco: 31.2%Asda: 16.8%Sainsbury's: 15.9%Morrisons: 11.4%Total Co-ops: 4.2%Waitrose: 3.9%Somerfield: 3.7%Aldi: 2.9%Lidl: 2.3%Iceland: 1.7%Netto: 0.6%Farm Foods: 0.5% Source: TNS | Supermarket share Tesco: 31.2%Asda: 16.8%Sainsbury's: 15.9%Morrisons: 11.4%Total Co-ops: 4.2%Waitrose: 3.9%Somerfield: 3.7%Aldi: 2.9%Lidl: 2.3%Iceland: 1.7%Netto: 0.6%Farm Foods: 0.5% Source: TNS |
| They bought the chain for about £1.1bn three years ago. | They bought the chain for about £1.1bn three years ago. |
| Somerfield was put up for sale in January and the Co-op first expressed an interest in a possible purchase in April. | Somerfield was put up for sale in January and the Co-op first expressed an interest in a possible purchase in April. |
| The Co-op may now be told by competition watchdogs to sell some of the stores it has purchased, with Morrisons, Waitrose and Iceland touted as potentially interested parties. | |
| Co-op chief executive Peter Marks says Somerfield's acquisition will provide "rocket fuel" for his group's growth plans. | Co-op chief executive Peter Marks says Somerfield's acquisition will provide "rocket fuel" for his group's growth plans. |
| Profits target | |
| Mr Marks said the deal, which is subject to regulatory approval, would "create a stronger fifth player in food and a convenience store chain with unrivalled geographic reach". Somerfield facts Founded as JH Mills in 1875Renamed Gateway in 1950Renamed Somerfield in 1994Floated on stock market in 1996 | |
| In April, the Co-op said it would spend £1.5bn to revamp its business and lift its fortunes, after 2007 profits fell 46% to £195.5m. | In April, the Co-op said it would spend £1.5bn to revamp its business and lift its fortunes, after 2007 profits fell 46% to £195.5m. |
| The firm also said then that it aimed to double its profits over the next three years. | The firm also said then that it aimed to double its profits over the next three years. |
| It expanded in July 2007 when it merged with fellow mutual United Co-operatives. | It expanded in July 2007 when it merged with fellow mutual United Co-operatives. |