Asda owners set to buy McColl’s, saving 16,000 jobs

  • McColl’s has 1,100 stores, 16,000 employees
  • Lenders rejected Morrisons bailout
  • PriceWaterhouseCoopers sells the business

May 6 (Reuters) – The owners of British supermarket group Asda are set to buy McColl’s from administration, saving around 16,000 jobs after the convenience store chain’s lenders rejected a bailout deal from rival Asda , Morrisons.

People familiar with the situation said on Friday that EG Group, the gas station and food retailer owned by brothers Zuber and Mohsin Issa and private equity group TDR Capital, was expected to strike a deal as early as Monday.

The deal will keep all of McColl’s stores and staff on higher pay for many, but will not include its pension plan, they said.

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EG Group declined to comment. The Issa brothers and TDR also own Asda. EG and Asda are run as separate businesses.

McColl’s operates 1,100 stores, including convenience stores under its own name and Morrisons Daily, as well as Martin’s newsagents. About 6,000 of its employees are full-time.

The company announced earlier that it would go into administration, a form of creditor protection, appointing PriceWaterhouseCoopers (PWC) as administrators.

He said that although talks with Morrisons, with whom he has a wholesale supply agreement, had progressed, “the lenders have made it clear that they are not convinced that such talks will reach an acceptable outcome for them”.

McColl’s, which has just under 170 million pounds ($210 million) in debt, said it expected PWC to sell the business as soon as possible.

Sky News first reported that EG was to strike a deal.

Morrisons said his proposal would have preserved the vast majority of jobs and shops, while protecting pensioners and lenders.

“For thousands of hard-working and retired people, this is a very disappointing, damaging and unnecessary outcome,” a Morrisons spokesman said of McColl’s arrival in administration.

McColl’s has requested that the London listing of its shares be suspended with immediate effect. Shareholders had already seen the value of their investment virtually wiped out over the past year.

McColl’s, which has suffered from availability issues and uneven transactions, had been in talks with lenders for weeks to try to resolve funding issues. Read more

Morrisons, which is ahead of market leader Tesco (TSCO.L), Sainsbury’s (SBRY.L) and Asda, has been owned since October by US private equity group Clayton, Dubilier & Rice (CD&R).

Morrisons’ deal with McColl’s has seen over 200 stores converted to Morrison’s Daily with a target of 450 by November 2022. Morrisons’ 2021 annual report values ​​its potential exposure to its McColl’s contract at £65-130m.

Smiths News (SNWS.L), which supplies McColl’s with newspapers and magazines, said the retailer posed a bad debt risk to it of 6-7 million pounds, including 1.2 million pounds in arrears.

($1 = 0.8115 pounds)

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Reporting by James Davey in London and Pushkala Aripaka and Amna Karimi in Bengaluru Editing by Rashmi Aich and Mark Potter

Our standards: The Thomson Reuters Trust Principles.

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