Co-op plans to buy Somerfield chain

8:00am Wednesday 7th May 2008

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SOMERFIELD supermarkets could soon vanish if a bid by the Co-operative group for the chain goes ahead.

The Co-op has confirmed that it is currently in talks with Somerfield about making an offer.

If the sale goes ahead Dursley's only two supermarkets, in Parsonage Street and Kingshill, will become Co-op stores.

It is believed that Co-op has lined up financing worth up to £1.9billion from three of Britain's largest banks, Lloyds TSB, Barclays and RBS, in an effort to buy Somerfield - a Bristol-based company currently owned by property entrepreneur Robert Tchenguiz and private equity groups Apax Partners and Barclays Capital.

The likely price of below £2billion for the chain of over 1,000 stores is far lower than the £2.5billion that Somerfield had originally hoped for.

A spokesman for Co-op group said: "We can confirm we are in discussion with Somerfield over the possibility of making a offer for the business.

"However it is early days and we have not moved on any further from the talks at this stage."

Co-op group is Britain's fifth largest food retailer and number three in the pharmacy league table.

If the deal goes ahead, it would give the Co-op group an eight per cent share of Britain's food retail sector.

Co-op supermarkets are known for their ethical standards with the chain stocking over 180 different Fairtrade products.

Co-op already run small stores in Highfields, in Dursley, Berkeley and Wotton-under-Edge.

Neither Co-op nor Somerfield were part of a group of supermarkets, which included Sainsburys, Morrisons, Asda and Tesco, who were fined at the end of last year for fixing the price of milk, earning them collectively around £270 million extra revenue.