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Co-operative Group on Wednesday said it has agreed to sell its petrol forecourt business to food retailing peer Asda for an enterprise value of £600 million.
The deal includes 129 petrol forecourt sites across the UK, representing 5% of Co-ops total retail estate of 2,564 stores.
Asda was bought by the Issa brothers and UK-based private equity firm TDR Capital in February last year for £6.8 billion. The Issa brothers, Zuber and Mohsin, made their money through EG Group, a petrol station business that has 6,000 sites in the UK and Europe.
Co-op said the proceeds - being cash consideration of £438 million - will be used to reinvest into its core convenience business and pricing, as well as reducing debt. The remainder of the £600 million enterprise value represents IFRS 16 lease liabilities of £162 million.
‘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 Chief Executive Shirine Khoury-Haq.
The deal is expected to close in the fourth quarter.
In addition to its food stores, Co-op operates over 800 funeral homes and also has interests in insurance and legal services.
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