Morrisons prevails in race to snap McColl’s out of administration

After a weekend of twists and turns, it was confirmed on Monday afternoon (9 May) that Morrisons had won the battle to acquire McColl’s out of administration in a pre-pack deal.

The supermarket giant saw off competition from Asda owners the Issa brothers and TDR Capital after its initial offer Thursday last week was turned down by McColl’s lenders. 

The deal means that all of McColl’s 16,000 staff and 1,100 stores, which include 270 Morrisons Daily formats, will be transferred to Morrisons’ ownership. The big-four grocer has also agreed to rescue McColl’s two pension schemes, which have more than 2,000 members.

Morrisons said its existing wholesale agreement with McColl’s “will continue without interruption”, that all of McColl’s stores will continue to trade and that the c-store specialist’s lenders and creditors will be paid in full. 

The grocer had initially made an offer to take over McColl’s late on Thursday afternoon with the business still solvent, but its offer was rebuffed by the c-store’s bankers.

Morrisons chief executive David Potts said that, while he was “disappointed” that McColl’s entered administration in the first place, he believed this was the best solution for all parties. 

“Although we are disappointed that the business was put into administration, we believe this is a good outcome for McColl’s and all its stakeholders. 

“This transaction offers stability and continuity for the McColl’s business and, in particular, a better outcome for its colleagues and pensioners. 

“We all look forward to welcoming many new colleagues into the Morrisons business and to building on the proven strength of the Morrisons Daily format.”

Rob Lewis of PwC, who had been appointed administrators by the business on Friday, said the deal would provide “much-needed certainty” for McColl’s 16,000-strong workforce, particularly against the backdrop of the growing cost-of-living crisis. 

“Especially during the current economic climate, the completion of this transaction provides much-needed certainty to McColl’s 16,000 staff after a period of understandable concern following the group’s challenges over the past months. 

“As well as saving thousands of jobs, this deal secures a platform for the trustees of the group’s pension schemes to enter into arrangements which will protect the pensions entitlements of so many people. All in all, a really positive outcome.

“Morrisons’ wholesale supply agreement will continue in place after the transaction, minimising disruption to customers and employees as all stores will continue to trade. We wish Morrisons well with integrating McColls into their business.”

A spokesperson for EG Group, the petrol forecourt giant owned by the Issa brothers, said: “EG confirms that it was interested in rescuing the McColl’s business. Our proposal would have safeguarded the UK jobs of 16,000 McColl’s colleagues, increased the pay of all hourly-paid colleagues aged 18 and over to £10.05, maintained all the currently trading stores, and ensured continued provision of invaluable community services, such as Post Office counters. Moreover, EG Group had proposed to maintain the link between McColl’s pensions schemes and the business, respecting historical promises made to the members of the schemes.

“EG also hopes the announcement will bring to an end the uncertainty for the hard-working colleagues at McColl’s and wishes them the best for the future.”