Competition concerns: Morrisons’ takeover of McColl’s probed by CMA
The competition watchdog is probing Morrisons’ takeover of beleaguered newsagent operator McColl’s, it has been confirmed.
The Competitions and Markets Authority (CMA) said on Monday it had launched an inquiry to investigate whether the takeover will impact competition in the UK, with an initial enforcement order.
The two businesses will be instructed to compete as normal with no integration, until the probe is complete.
Grocer Morrisons coughed up some £182m to snap up beleaguered convenience store operator McColl’s, defeating a rival bid from Asda owners the Issa brothers.
A CMA spokesperson said: “We’re aware of the circumstances surrounding Morrisons buying McColl’s convenience stores.
“Now that the businesses have told us that they intend to submit the deal for our review, we will conduct our investigation as promptly as possible.
“Imposing an interim enforcement order is standard practice where a deal has already completed – but we’ve worked closely with Morrisons to ensure that it can provide the support that McColl’s needs to continue to operate during our investigation.”
The newsagent chain’s equity value was worth around £3m earlier this month while senior creditors were owed some £160m, documents from administrators PwC revealed.
While the Issa’s EG Group had offered “materially” more cash than private equity owned Morrisons, the grocer won out after it pledged more cash for unsecured creditors. Morrisons also clinched the deal due to its position as McColl’s main supplier.
Four credible bidders had been eyeing a takeover of the debt-laden firm in its last few months before calling in administrators.
However, the number of bidders had slimmed to three by the time McColl’s shares were suspended on 6 May, narrowing further to just Morrisons and forecourt operator EG Group.
A court application process for plunging the companies into administration was placed on hold on Friday 6 May, until Monday 9 May, the documents revealed.
This was partially as the administrators could not trade the business over the weekend, ‘as they did not have funding to support trading, and practical issues such as the sales of alcohol and other licenced goods would have been prohibited.”
What’s more, PwC revealed that had the appointment concluded on the Friday, joint administrators would have completed a sale of McColl’s business and assets to EG Group.