The Co-operative Group agreed the sale of 298 of its convenience food stores to McColls for £217 million on Wednesday.
The deal, which is subject to approval from the competition watchdog, comes as part of the Co-op’s strategy to focus on larger stores of over 3,000 square foot. The stores to be sold average around 1,700 square foot.
“Today's announcement is completely in line with our strategy, as these stores did not allow us to provide a sufficiently compelling own-brand offer for our members going forwards,” said Steve Murrells, chief executive of Co-op Food.
The stores represent around 11 per cent of the 3,750 outlets that the Co-op currently operates. Proceeds from the sale will be re-invested in larger stores, said Murrels in a statement. The firm aims to open 100 stores this year.
All 3,808 staff working in the shops will keep their jobs under the same terms and conditions.
Earlier this year the Co-op hired advisers at investment bank Rothschild to find buyers for the shops. The firm, which is owned by its millions of members, has been repositioning itself in an increasingly competitive grocery sector.
It brought back its traditional four-leaf clover design as part of a re-branding exercise launched in May. It has also sold 36 loss-making stores and 60 which were standing empty.
The stores will add to McColls existing 900 small outlets in the UK.
The convenience retail specialist, which listed on the London Stock Exchange in 2014, has announced a £13.1 million share placing to fund the acquisition.
The size of the deal means it will be subject to a shareholder vote.
Jonathan Miller, chief executive of McColl’s, said: “This opportunity substantially accelerates our growth strategy and expands our neighbourhood presence for the benefit of our customers. These stores are profitable, well invested, and the perfect size for our operating model.”
