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.

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.