13th Jul 2016 16:19
LONDON (Alliance News) - McColl's Retail Group PLC late Wednesday said it has signed a conditional agreement to purchase 298 convenience stores from the Co-Operative Group Ltd for a total of GBP117.0 million.
"This opportunity substantially accelerates our growth strategy and expands our neighbourhood presence for the benefit of our customers," said Chief Executive Jonathan Miller. "These stores are profitable, well invested, and the perfect size for our operating model. We expect the transaction to be significantly earnings enhancing for our shareholders."
McColl's already has 933 stores and the business believes it will benefit from higher sales and earnings, potential synergies using its existing operating model and increased exposure to the growth category of fresh and chilled food products.
All 3,800 staff at the Co-Op stores will be transferred over to McColl's.
"The board expects the acquisition to be significantly earnings enhancing in the first full year following completion of the acquisition," said the company.
The deal will need to be approved by shareholders and regulators, but McColl's said it expects to acquire the stores in batches of 20 per week over five months, up to a maximum of seven months. The first stores are expected to be acquired in January next year.
McColl's will pay for each store as the ownership is transferred over from the Co-Op, and will be solely paid in cash.
McColl's plans to raise GBP12.7 million from a placing launched Wednesday and the balance from existing facilities. The deal is not conditional on the placing, which will comprise of 10.5 million shares being issued to new and existing investors to raise GBP13.1 million before costs.
The company has authorisation to raise GBP10.5 million via the issue of shares, meaning the other shares to be issued will need approval from shareholders.
McColl's shares closed up 2.0% to 131.0 pence per share on Wednesday.
By Joshua Warner; [email protected]; @JoshAlliance
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