Morrisons triumph after weekend shootout for control of McColl’s | Economic news
Morrisons has triumphed in the battle to take control of McColl’s Retail Group, one of Britain’s largest convenience store chains, after a final takeover bid from its syndicate of bank lenders.
Sky News can reveal the supermarket giant has seen eleventh-hour competition from petrol station operator EG Group with a bid that will see McColl’s stores and workforce preserved in their entirety.
The deal will be structured as a pre-pack administration, meaning Morrisons will buy McColl’s immediately after it enters PricewaterhouseCoopers (PwC)-supervised insolvency proceedings.
On Friday, Morrisons said he believed there was no reason for convenience store empire to be declared insolventbut the pace of weekend events, with McColl’s on the verge of collapsedid not give PwC time to finalize a solvent transaction, according to an insider close to the company.
Morrisons’ commitments to the future of McColl’s include retaining all 1,100 stores and 16,000 employees, as well as meeting all of its ongoing pension obligations, the insider added.
An improved offer to McColl’s lenders that would see them immediately repaid in full, satisfying their main demand, was also among the deciding factors.
Morrisons’ status as a major creditor of McColl’s would also have been influential.
An announcement is expected to be made by PwC later Monday.
Paradoxically, the result might have given McColl’s a better result than a solvent sale to Morrisons, which said on Friday it would preserve the “vast majority” of its stores and jobs.
The result follows a battle over the future of one of London’s stock market’s most unloved companies as its shares plummeted from a valuation of £200m to almost nothing.
On Friday night, EG Group appeared to have stitched together a takeover of McColl’s, although its stance on the company’s two pension plans began to attract political attention.
McColl’s lenders on Friday rejected a creditworthy bailout offer from Morrisons that would have required them to roll over more than £100million of debt at the supermarket chain, but be repaid in full when the loans expired.
The lenders, which include Barclays, HSBC and state-backed NatWest Group, were seeking immediate repayment of their loans, which initially led them to favor EG Group.
A spokesperson for the trustees said over the weekend: “Any company seeking to acquire McColl’s must do the decent thing and ensure that promises made to staff regarding their pensions are honoured.
“We would be extremely surprised if an organization with an interest in demonstrating good corporate citizenship were to use a pre-pack administration to stop supporting the programs, without any engagement with the administrators.”
McColl’s is a major partner of Morrisons, operating hundreds of smaller stores under the Morrisons Daily brand.
The company, which is listed on the London Stock Exchange but had its shares suspended on Friday, employs around 6,000 full-time equivalent staff.
He raised £30m from shareholders in a cash call just eight months ago.
Confirmation of the administrative proceedings will make it the UK’s largest retail sector insolvency by headcount since the collapse of Edinburgh Woolen Mill Group in 2020.
Since then Debenhams, which employed around 12,000 people, and Sir Philip Green’s Arcadia Group, which had around 13,000 employees, have also gone bankrupt, falling victim to changing retail shopping habits and the pandemic.
Morrisons, McColl’s, EG and PwC declined to comment.