The Co-operative Group has completed its £1.565 billion acquisition of the Somerfield supermarket chain.

The deal gives the group an eight per cent share of the marketplace, with 3,000 stores and annual sales of over £7bn.

Peter Marks, group ceo at The Co-op 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.

“Our first priority now is to start integrating the two businesses - something that will bring real scale benefits, enabling us to provide better value to our customers. There is a strong strategic fit between these businesses and we are looking forward to creating a single business combining the inherent strengths of both Somerfield and The Co-operative Group.”

Marks added that his group’s staunchly ethical business model is enjoying a renaissance as shoppers seek out the integrity of the brand in food, financial services and beyond. He said: “The acquisition of Somerfield and the proposed merger with the Britannia Building Society, set us up for an exciting future.”

The enlarged food business will be headed by the group’s managing director for food, Tim Hurrell. The integration process is likely to take up to two years, with the Somerfield brand remaining in some locations throughout that period as stores are gradually converted to The Co-operative brand.

Somerfield’s Bristol headquarters will be retained for about 18 months, while all head office functions are moved to Manchester on a phased basis. The Co-op said relocation opportunities will be offered to as many staff as possible.

After 12 successive quarters of like-for-like growth, sales (excluding fuel) in the group’s food stores in the seven weeks to February 21 were 6.2 per cent up on last year, while sales in its 700 re-branded food stores were up on average 12 per cent. Over the same period like-for-like sales in Somerfield were up 3.6 per cent and in stores less than 5,000 sqft, they were up 7.4 per cent.

The Co-op has just announced a record advertising spend of £70m this year. This includes a £10m campaign to support the largest re-branding exercise in UK corporate history. To date, as part of a £1.5bn makeover, the group has refitted and re-branded 2,700 of its 4,300 outlets with the new look The Co-operative identity.

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