Co-operative Group Acquires Somerfield
The Co-operative Group and Somerfield have entered into an agreement for the Co-operative Group to acquire Somerfield for £1.565bn on a cash-free debt-free basis.
Somerfield operates approximately 880 local grocery retail outlets across the UK. In the year to April 2008 Somerfield generated net sales of £4.2bn, and earnings before interest, tax and depreciation of £233m. At the year end net assets totalled £1.3bn.
The combined food business will operate more than 3,000 grocery stores and generate net sales of about £8bn, making it a market leader in convenience food retailing and the fifth largest food retailer in the UK with a market share of approximately 8%.
Peter Marks, Chief Executive of The Co-operative Group said: "This is good news for consumers and for competition in the grocery market, where we will create a stronger fifth player in food and a convenience store chain with unrivalled geographic reach.
"For The Co-operative Group this is a transformational deal – cementing our position as the UK’s premier community retailer and helping us significantly as we lead a renaissance of The
Co-operative brand. Together, The Co-operative and Somerfield colleagues will be better placed than ever before to provide consumers with great choice, value and service.
Paul Mason, Chief Executive of Somerfield said: "The Co-operative Group and Somerfield have a similar focus in terms of customers, store types, product ranges and business vision. Our shared vision of providing a high-quality and affordable convenience offer to local communities means that together we will be twice as strong, and therefore twice as able to deliver the local grocery shops British customers demand.
The transaction will be financed through committed bank facilities underwritten by Barclays, Lloyds TSB Corporate Markets and The Royal Bank of Scotland, with significant funding also provided by Bank of Ireland and The Co-operative Bank.
Financial advisers to The Co-operative Group were Credit Suisse (lead financial adviser) and RBS/ABN Amro Corporate Finance (joint financial adviser). HSBC were also financial advisers. Citi were advisers to Somerfield.
The transaction is conditional on receipt of appropriate regulatory approvals