The Co-op has had a cut-price bid for symbol group Costcutter rejected as grocery retailers continue to seek consolidation in a rapidly changing food market.

The mutual had a £15m bid for Costcutter rejected by its owner Bibby Line several weeks ago, according to Sky News.

Bibby Line is understood to be open to the prospect of further talks, but would only consider offers closer to £50m.

A full takeover by the Co-op would create a business with more than 4,000 stores across the UK.

The mutual, which has transformed its fortunes under the leadership of former group chief executive Richard Pennycook and his successor Steve Murrells, has already snapped up fellow symbol group Nisa as it bids to broaden its business.

Tesco’s £3.7bn acquisition of Booker, Morrisons’ supply deals with Amazon and McColl’s, and Sainsbury’s impending £13bn merger with Asda have added further urgency to consolidation talks.

The Co-op already supplies Costcutter stores, including its Mace, Simply Fresh and Supershop fascias, following the collapse of wholesaler Palmer & Harvey.

The deal is worth around £500m a year to the Co-op – an existing relationship that would make it a natural fit for Costuctter.

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