Asda seals £438m deal for Co-op’s petrol forecourt business

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Asda has confirmed plans to buy the Co-op’s portfolio of 132 petrol station forecourts in a £438m deal.

The supermarket giant said the acquisition, worth £600m including IFRS lease liabilities, will accelerate plans to grow its convenience store business.

Co-op forecourt store

Around 2,300 employees will transfer from the Co-op stores to Asda

Asda will take ownership of 129 established petrol forecourt stations, each of which includes a c-store of between 1,500 sq ft and 3,000 sq ft, as well as three more sites currently under development.

The grocer, which emerged as the leading candidate to buy the business over the weekend, said 2,300 workers currently employed at the Co-op stores will transfer to Asda following completion of the deal.

The petrol station portfolio raked in sales of £863m for the Co-op in the year to June, delivering an EBITDA of £53m.

Asda said it sees potential to grow that EBITDA figure through synergies and “development opportunities”.

Asda co-owner Mohsin Issa 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 Co-op said the disposal would shore up its balance sheet and allow it to reinvest into its core convenience business and grow its wholesale, franchise and ecommerce operations.

The Co-operative Group chief executive Shirine Khoury-Haq said: “This transaction is in line with our strategy to move away from operating petrol forecourts and supports our vision of cooperating for a fairer world while building our core leading convenience business.

“I would like to thank our incredible colleagues in these stores and we will work closely with Asda to ensure a smooth transition.”