The Co-op Group has today (31 August) announced plans to sell its petrol forecourt estate to Asda for £600m.
The transaction, due to complete by the end of the year, will involve 129 petrol forecourt sites spread throughout the UK, which represents 5% of the organisation’s estate of 2,564 stores.
“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 Group CEO, 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.”
As part of the deal, Asda will pay £438m in cash and take on responsibility for Co-op’s lease payments which total about £162m. About 2,300 Co-op petrol station staff will be moved to Asda’s employment.
Asda said the purchase is part of plans to move into the convenience store market.
“This acquisition accelerates our strategy in this area and forms part of our long-term ambition to become the UK’s second-largest supermarket,” said Mohsin Issa, co-owner of Asda, adding that the supermarket saw convenience stores as a “significant growth opportunity for the business”.
In 2021, Asda was bought by the Issa brothers, two entrepreneurs from Blackburn who made their billion-pound fortunes running petrol stations. The Issa brothers’ EG Group, which owns petrol stations and convenience stores worldwide, bought Asda’s current stock of 320 forecourts last year for £750m.
The sale of non-core petrol forecourt businesses will enable it to “focus on core convenience proposition whilst significantly deleveraging and strengthening the Group’s balance sheet”, said a statement from the retailer.
The Group said proceeds from the sale will be reinvested in the Group’s leading core convenience business centred around its retail estate and its growing wholesale, franchise and e-commerce operations, including new convenience stores in the heart of more communities. It will also be invested in the organisation’s pricing, store operations, technology, and logistics, and support the reduction of Co-op Group’s net debt.
