UK's Morrisons clinches deal for convenience chain McColl's (updated)

MccollS Retail

09/05/2022 17:50

(Recasts with Morrisons statement)
    May 9 (Reuters) - British supermarket group Morrisons has
won a battle against the owners of rival Asda to buy collapsed
convenience store chain McColl's.
    In a deal structured through a so called pre-pack
administration, Morrisons, which has a wholesale supply deal
with McColl's, will take on all its 1,160 stores, including 270
Morrisons Daily format stores.
    Morrisons will also take on all of McColl's workforce of
16,000 and its two pension schemes, which have over 2,000
members.
    It said McColl's' secured lenders and preferential creditors
would be paid in full with a distribution also expected to
unsecured creditors.
    McColl's went into administration with debt of just under
170 million pounds ($210 million).
    EG Group, the petrol station and food retail business owned
by brothers Zuber and Mohsin Issa and private equity group TDR
Capital, was set to seize control of McColls after its lenders
rejected a rescue deal from Morrisons on Friday. The brothers
and TDR also own Asda.  urn:newsml:reuters.com:*:nL3N2WY1H1
    However, over the weekend, Morrisons came back with a fresh
proposal.
    “Although we are disappointed that the business was put into
administration, we believe this is a good outcome for McColl’s
and all its stakeholders," said Morrisons CEO David Potts.
    "This transaction offers stability and continuity for the
McColl’s business and, in particular, a better outcome for its
colleagues and pensioners."
    Morrisons, which trails market leader Tesco  TSCO.L ,
Sainsbury's  SBRY.L  and Asda, has been owned since October by
U.S. private equity group Clayton, Dubilier & Rice (CD&R).
    McColl's had been in talks with its lenders for weeks to try
to resolve its funding woes. Its shareholders had seen the value
of their investment virtually wiped out over the last year.
    The retailer's stock was suspended from trading on Friday.
    The sale to Morrisons was conducted by administrator
PriceWaterhouseCoopers.
    ($1 = 0.8103 pounds)

 (Reporting by James Davey in London and Muhammed Husain in
Bengaluru; Editing by Krishna Chandra Eluri and Bernadette Baum)
 ((James.Davey@ThomsonReuters.com))