The Co-operative Group confirmed today it is in talks over buying retailer Somerfield, in a deal believed to be worth around £1.7 billion.

Chief executive Peter Marks said The Co-op hopes to get the deal finalised by the summer. He said: “We have not yet reached a conclusion; we are still in negotiations. There is quite a way to go.

“We have been looking at Somerfield for quite a while, and believe it is a very good strategic fit for our food business. If we manage to secure a deal, it would create for us a very strong position in the convenience and neighbourhood store market.

“It is something we are very keen to pursue, if we can agree terms that are acceptable to us and them,” he added.

Marks has also revealed plans to invest £1.5bn in refitting the group’s existing stores, which will ensure all trading outlets are operating under a single brand.

Marks said it had been a “milestone year” for The Co-op and has unveiled financial figures for the year to January 12, which showed a jump in operating profits from £397.4 million to £431.6m before costs related to last year’s historic merger with Rochdale-based United Co-operatives. In food, like-for-like sales were 4.6 per cent higher and profits were up 50.5 per cent to £139.2m.

Marks said the major investment programme was designed to double profits in the next three years.

He said: “These results show that in spite of all the changes in the business we have continued to make huge strides. The Co-operative Group now has the critical mass necessary to deliver real change.”

Topics