Asda is buying the Co-operative Group's petrol station business in a £600 million deal as it expands into the convenience retailing sector.
The sale will see 5 per cent of the Co-op’s retail estate – including 129 petrol stations and three development sites – handed over to Asda, which already runs 230 petrol stations in the UK.
The Co-op said offloading its petrol forecourts will allow it to cut its debts and re-invest in its core convenience store business. The Co-op estate will be folded into Asda and re-branded, with a combined 450 sites operating under the Asda name.
For Asda – which is owned by brothers Mohsin and Zuber Issa and TDR Capital – the move is part of its plans to become the UK's second-largest supermarket chain. It currently sits in third place behind market leader Tesco and Sainsbury's.
Moshin Issa said the convenience sector represents a "significant opportunity" to grow the business.
"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 UK," he added.
Asda will pay £438m in cash and take on around £162m of lease liabilities as part of the deal, with the final amount set to be confirmed on completion later this year.
READ MORE: Co-op Group to cut 400 jobs
Around 2,300 Co-op staff who work across the sites being sold will transfer over to Asda once the deal is complete. It is expected to close by the end of this year.
The Asda supermarket chain bought in 2021 by the petrol station billionaire Issa brothers and their private equity partner TDR Capital, who also co-own the petrol station operator EG Group.
The Blackburn-based brothers leased their first petrol station in 1999 and already own about 700 petrol forecourts, making them a significant player in the UK's network of more than 8,000 petrol stations.
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