The deal gives The Co-op an 8 per cent market share of the UK grocery sector, making it the fifth biggest player. It has more than 3,000 stores generating annual sales in excess of£7bn.
The Co-op chief executive Peter Marks said: “This is great news for customers of both The Co-operative and Somerfield. 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 food business will be headed by the group’s managing director for food, Tim Hurrell. The integration process will likely take up to two years as stores are gradually converted to The Co-operative brand.
The Somerfield Bristol head office will be retained for about 18 months, while all head office functions are moved to Manchester on a phased basis. Relocation opportunities will be offered to as many staff as possible.
Marks said: “The Co-operative business model, built on trust and sound business ethics, is experiencing a renaissance as consumers increasingly appreciate the integrity of our brand, whether it be as a food retailer, a financial services provider or one of our other community businesses.”
The Co-op has revealed it will spend£70m on advertising this year, including a£10m campaign to support its corporate re-branding exercise.
Somerfield chief executive Paul Mason said: “Today marks the culmination of the phenomenal turnaround in the Somerfield business over the past three years. The Co-operative Group is buying a business that is in rude health, with strong, positive like-for-like sales and a profit margin that has doubled since the business was taken private in 2005.”
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