Co-op has had a £15 million bid rejected to take over independent grocery retailer Costcutter as Britain’s supermarkets look to cement their position in a shifting market.
According to Sky News, Co-op approached Costcutter’s owner, Bibby Line Group, with the offer several weeks ago. The conglomerate rejected it but is understood to have left the door open to further talks.
One source told Sky News that Bibby Line, which is involved in construction equipment hire, financial services and shipping, was prepared to consider offers worth at least £50m.
It is not known whether the Co-op would be prepared to offer that sum, but if a deal were reached the combined business would have well over 4,000 stores.
The Co-op is currently the UK’s fifth-largest food retailer, boasting more than 2,500 shops. In May, it bought out Nisa Retail following a takeover battle involving Sainsbury’s.
There has been speculation that Costcutter would join the rush for consolidation in the convenience sector following Tesco’s acquisition of wholesaler Booker in January 2017.
In August 2017 the retailer’s managing director Sir Michael Bibby sent a letter to members telling them to expect an announcement on a potential “collaboration” shortly, but as yet no take-over deal has materialised.
The UK’s second-biggest chain of corner shops announced a supplier agreement with Co-op in November, however, after wholesale chain Palmer & Harvey went into administration.
Under the arrangement, Costcutter pays Co-op around £500m a year to be its exclusive wholesale supplier.