Asda acquires Co-Op petrol stations

Supermarket group Asda has completed its acquisition of 132 grocery retail sites with attached petrol stations from The Co-operative Group for a cash value of £438m.

The transaction, which was announced at the end of August, had a total value of approximately £600m including IFRS16 lease liabilities of approximately £162m.

The deal included 129 existing sites across the UK with retail stores of between 1,500 and 3,000 sq ft and attached petrol stations, plus three development sites.

Around 2,300 Co-op employees will transfer to Asda as part of the agreement.

Co-op said it would use the proceeds to reinvest in its core convenience business and reduce net debt.

Asda currently operates 320 petrol stations across the UK.

Mohsin Issa, co-owner of Asda, said that the retailer was “committed to bringing Asda’s great value groceries and fuel to even more communities across the UK” through the newly acquired stores.

Although the sale of the sites has been formally completed, the deal remains subject to regulatory review. The Competition and Markets Authority has issued an Initial Enforcement Order requiring that the Co-Op sites remain entirely separate from Asda during its investigation, a process that is expected to take until mid-2023.

Aldi joins ‘big four’ as UK shoppers look to save money

Aldi has overtaken Morrisons to become the fourth-biggest supermarket in the UK.

Research firm Kantar said that as living costs rise, consumers are shopping around by visiting more stores and this is benefiting the discounters.

In the 12 weeks to 4 September 2022 Aldi’s sales rose by 18.7% and the chain reached a market share of 9.3%, making it the country’s fourth largest supermarket for the first time. Meanwhile Lidl saw its sales grow by 20.9% and its market share increased to 7.1%.

A decade ago, Tesco, Sainsbury’s, Asda and Morrisons together accounted for over three-quarters of the sector but that traditional “big four” is no more, said Kantar’s head of retail and consumer insight, Fraser McKevitt.

Tesco is still well ahead of its rivals with a market share of 26.9% after a 1.9% boost to sales, while Sainsbury’s is in second place with 14.6% of the market followed by Asda on 14.1%.

Morrisons, now in fifth place, holds 9.1% of the market.

Kantar’s data also revealed that grocery price inflation hit 12.4% in August, a new record. It means that the average annual grocery bill will increase by £572 if shoppers don’t make changes to what they buy and how they shop to cut costs.

UK inflation reached a four-decade high of 10.1% in July and the Bank of England has said that it expects the UK to fall into recession at the end of this year, continuing until early 2024.

Co-op sells petrol stations to Asda for £600m

The Co-op has agreed to sell its petrol forecourt business to Asda for £600m.

The deal includes 129 petrol filling stations with attached convenience stores across the UK, representing 5% of Co-op’s retail estate of 2,564 stores.

Under the agreement Asda will pay £438m in cash and take on responsibility for Co-op’s lease payments which total about £162m.

Co-op said that the sale would allow it to focus on its core convenience store business, including building new stores, as well as growing its wholesale, franchise and e-commerce operations. The transaction is also expected to reduce its debt levels and strengthen its financial position.

The stores transferring to Asda’s ownership recorded net sales of £863m and pro forma EBITDA of £53m in 12 months to June 2022.

For Asda, the deal supports its aim to move into the convenience market.

“We see convenience as a significant growth opportunity for the business,” said Mohsin Issa, co-owner of Asda. “This acquisition accelerates our strategy in this area and forms part of our long-term ambition to become the UK’s second largest supermarket.”

Asda currently has 320 petrol stations across the UK.

The sale is expected to be completed in the fourth quarter of this year.

Asda grows UK market share to 17.5%

UK supermarket chain Asda reported today that its share of the UK grocery market has increased to 17.5%, up 0.1% year-on-year.

The retailer, which is owned by Wal-Mart Stores Inc (NYSE:WMT) in the US, is currently the UK’s second-biggest supermarket chain, behind Tesco. Sainsbury’s is in third place and Morrisons is fourth.

Asda said today that it out-performed the market in the 13 weeks to 29 September, its fiscal third quarter, with like-for-like sales (excluding fuel and VAT) rising by 0.3%.

Chief executive and president Andy Clarke heralded the supermarket’s “solid results in a tough market” and said that Asda was continuing to “strike the right balance in terms of delivering low prices, great quality and unbeatable service”.

The company also noted that money is increasingly tight for customers, despite the UK emerging from recession in the third quarter.

Asda’s latest income tracker reveals that, after a period of slight improvement, disposable income is relatively flat this month.

Official figures released today by the Office for National Statistics (ONS) confirm that consumers are reigning in their spending. Overall retail sales decreased by 0.8% in October 2012, as shoppers cut back on purchases of food and clothing.