A new dawn for the Co-operative retail movement

Timothy writes: having been elected only a few days ago, it was a surprise to receive a letter from Peter Marks, the Chief Executive of the Co-operative Group confirming that the Somerfield deal had now fully completed. I then realised that it was being sent to me because of my recent election!

I have been really keen on this move for some time, and it is testament to the strategic vision of Peter Marks that has secured this deal. He first had a look at Somerfield in 2005 as CEO of United Co-operatives, when Somerfield was in a right old mess. Thankfully the new venture capitalist owners turned the company around, in the financial year ended April 2008, Somerfield generated sales of £4.2 billion and a profit (EBITDA) of £233 million.

The final price paid by The Co-operative Group is currently unclear because it has sold stores bought from Somerfield and has yet to sell some others. The final price will therefore be below the headline figure of £1.565 billion!

Although the Co-operative now own Somerfield it will take some time for all stores to be converted. Some are being sold - like the busy store on George Street, Central Croydon to Waitrose). Somerfield have produced a frequently asked questions list.


Below is the press release as issued via the Press Association:

The Co-operative Group has completed its £1.6 billion takeover of grocery chain Somerfield, a move cementing its position as the UK's fifth largest food retailer.

The tie-up has created a chain of around 3,000 outlets with a market share of 8% and annual sales exceeding £7 billion.

It also marks the closing chapter for Somerfield, which traces its history back to a small family grocery store more than 130 years ago.

Co-operative Group chief executive Peter Marks said: "It is a transformational deal which cements our position as the UK's number one community retailer and returns us to the premiership of food retailers. It is no longer the Big Four, it's the Big Five."

The Co-op is taking on more than 650 Somerfield stores, but has had to offload branches in areas where watchdogs had concerns over competition.

The integration process is expected to take up to two years, as Somerfield's stores are gradually converted to The Co-operative brand.

The UK's biggest mutual retailer will close Somerfield's Bristol headquarters in around 18 months, in a move affecting around 750 staff.

The Co-op hopes to be able to relocate "as many as possible" of Somerfield's employees to the merged head office in Manchester.

The scale benefits of integrating the two businesses will allow the group to provide better value to customers, Mr Marks said.

Somerfield chief executive Paul Mason said: "It's not been easy, but I really believe that the take private of Somerfield has allowed the business to be transformed in a way that just couldn't have happened in the public markets. I am thrilled to see the revitalised Somerfield going into such good hands."