LEEDS, U.K.—Asda announced it has agreed to acquire 132 sites from The Co-operative Group in a transaction with a total value of about £600 million (US$693 million). Asda said the acquisition is “part of its growth strategy to move into the convenience market and bring Asda value to more local communities.”
The purchase includes 129 established sites with a grocery retail store of between 1,500 and 3,000 square feet and an attached petrol filling station, as well as three development sites. They are located across the U.K. and will create a new and distinct format for Asda in the convenience market.
“We see convenience as a significant growth opportunity for the business. This acquisition accelerates our strategy in this area and forms part of our long-term ambition to become the U.K.’s second largest supermarket,” said Mohsin Issa, co-owner of Asda.
The transaction is subject to normal conditions and will be financed through a combination of existing cash resources and bank finance.
The stores being acquired delivered net sales of £863 million and pro forma EBITDA of £53 million for the 12 months ended June 2022, with potential to grow EBITDA further when development opportunities and other synergies are taken into account, according to the company.
“We have always been clear in our ambition to grow Asda and are hugely excited to create this new and distinct part of our business, giving us the opportunity to bring Asda value in fuel and groceries to even more customers and communities across the U.K.,” said Issa.
Co-op stores employ about 2,300 people.
“We look forward to welcoming the Co-op colleagues to this new part of our business after we complete the transaction and due processes in the coming months,” he said.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, told BBC that although Asda was expanding its petrol forecourt numbers, the supermarket would be "more focused on reaping rewards from added grocery sales, rather than fuel revenues."
"Forecourt shops are not now seen simply as petrol stations but rather as convenience stores which sell fuel," she added.
Read more about Mohsin and Zuber Issa’s expansion plans for Asda and EG Group in “On the Move” in NACS Magazine.