// Asda deal will see Co-op focus on debt reduction, operational investment and more c-stores
// Co-op CEO says move represents strategy to move away from non-core forecourt retailing
The Co-op has confirmed that it is to sell its petrol forecourt business to Asda for an ‘enterprise value’ of £600 million.
The transaction includes 129 petrol forecourt sites, spread across the UK and represents 5% of Co-op’s retail estate of 2,564 stores.
The deal accelerates Asda’s expansion of its own forecourt and convenience retail format Asda On The Move.
Convenience is a key tenet of Asda owner, the Issa brothers, growth strategy for the grocer.
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The enterprise value of the acquisition is approximately £600 million and will include a cash consideration of £438 million. It is also inclusive of IFRS 16 lease liabilities of approximately £162 million.
The final amount is to be confirmed on completion, which is expected in the final quarter of this year.
The Co-op said that proceeds from the sale of its “relatively small” non-core petrol forecourt business, will be used to reinvest into Co-op’s core convenience business centred on its retail estate, grow wholesale, franchise and ecommerce operations, including new convenience stores.
It will also invest in pricing, store operations, technology, and logistics and support the reduction of Co-op’s net debt
“This transaction is in line with our strategy to move away from operating petrol forecourts and supports our vision of Co-operating for a fairer world while building our core leading convenience business,” said Co-op chief executive Shirine Khoury-Haq.
“I would like to thank our incredible colleagues in these stores, and we will work closely with Asda to ensure a smooth transition.”
Rothschild & Co acted as financial advisor to the Co-op, with Addleshaw Goddard acting as principal legal advisor.