Morrisons has saved convenience chain McColl’s in a last-minute triumph over EG Group, saving 16,000 jobs and stopping 1,100 stores across Britain from closing, according to Sky News.
McColl’s Retail Group, one of Britain’s biggest convenience store chains, fell into administration on Friday, threatening its 1,100 store portfolio and putting the jobs of some 16,000 employees at risk.
According to Sky News, the new offer from the supermarket giant will see McColl’s stores and workforce preserved in their entirety.
The pre-pack administration deal will see Morrisons buying McColl’s immediately after it enters insolvency proceedings, which are being overseen by PricewaterhouseCoopers (PWC).
Big 4 grocer Morrisons and forecourt giant EG Group – run by Adsa owners the Issa brothers – were both in the running to complete a rescue deal for McColl’s.
While Morrisons’ early approach had been rejected by lenders, it is understood that both businesses put forward improved offers prior to the administrators’ Sunday 6pm deadline.
McColl’s lenders – which include Barclays, HSBC and the state-backed NatWest Group – initially preferred the proposal from EG Group, which had said it would instantly repay McColl’s debt of more than £160m.
However, an improved offer from Morrisons would see McColl’s lenders repaid immediately in full, satisfying their principal demand, was key to the grocer’s winning bid. Morrisons’ position as a major creditor is also likely to have been influential in the decision-making process.
McColl’s is an important partner of Morrisons, operating hundreds of smaller shops under the Morrisons Daily brand.
Morrisons’ commitments to the future of McColl’s also include retaining all 1,100 stores and 16,000 workers, as well as honouring all of its outstanding pension obligations.
David Potts, Morrisons’ chief executive, said: “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.
“This transaction offers stability and continuity for the McColl’s business and, in particular, a better outcome for its colleagues and pensioners.
“We all look forward to welcoming many new colleagues into the Morrisons business and to building on the proven strength of the Morrisons Daily format.”
A spokesperson for McColl’s Pension Schemes said: “The trustees welcome the announcement that Morrisons will continue to support the schemes following its acquisition of the McColl’s business.
“The trustees will continue to engage with all stakeholders to ensure that members’ benefits are protected following the completion of the transaction.”