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Search forJob fears over Bristol supermarket takeover
Wednesday, July 16, 2008, 11:09
The deal will cement the Co-op’s position as the UK’s fifth biggest food retailer, with sales of about £8 billion and a market share of approximately 8 per cent but has left a question mark over the future of the Whitchurch headquarters of Somerfield.
The supermarket chain employs about 300 people at its head office and a further 800 at its stores in the Bristol area.
There are also concerns that some stores will shut in areas where there are both Somerfield and Co-op outlets operating side by side.
However, Co-op chief executive Peter Marks said the acquisition would provide “rocket fuel” for the group’s growth plans.
Mr Marks said the deal, which is subject to regulatory approval, would be good news for consumers and for competition in the grocery market.
“We will create a stronger fifth player in food and a convenience store chain with unrivalled geographic reach,” he said.
The Co-op, which is a mutual company owned by 2.5 million members, unveiled a three-year plan in April to double profits and invest £1.5 billion in transforming its retail estate.
As well as currently being the UK’s fifth largest food retailer, it is the third largest pharmaceuticals chain, the biggest provider of funeral services and the largest independent travel business in the country.
Somerfield is made up 880 outlets across the UK and had net sales of £4.2 billion in the year to April, with earnings of £233 million.
The owners of Somerfield, a consortium including property tycoon Robert Tchenguiz, private equity firm Apax and investment bank Barclays Capital, have been looking for a buyer for some time. They were reported at the weekend to be looking for a price of £2.5 billion.
Somerfield was taken private by its current owners in a £1.1 billion deal in December 2005.
It began life as JH Mills in Bristol in 1875, but changed its name to Gateway in 1950 because the city was the “gateway to the West Country”. The group dropped the Gateway name in 1994 to become Somerfield and listed on the Stock Exchange two years later.
Somerfield chief executive Paul Mason said today: “With Somerfield and the Co-operative Group as one business, we believe that we can learn from each other’s strengths to ensure we continue to develop the best local grocery shops in Britain.”
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