The Co-operative Group (Co-op) has announced it will sell the company’s petrol forecourt business to Asda in a £600m deal.
This transaction includes 129 petrol forecourt sites, spread across the UK and represents five per cent of Co-op’s retail estate of 2,564 stores.
It will use the funds to reinvest in its stores and e-commerce operations, while expanding its presence with more shops nationwide.
The sale will also support its efforts to reduce its net debt.
Shirine Khoury-Haq, Chief Executive at the Co-op said: “This transaction is in line with our strategy to move away from operating petrol forecourts and supports our vision of Co-operating for a fairer world while building our core leading convenience business. I would like to thank our incredible colleagues in these stores, and we will work closely with Asda to ensure a smooth transition.”
The acquisition is due to be completed in the fourth quarter of 2022.
Earlier this summer, petrol prices rallied to all-time highs of 191.27p per litre for unleaded and 199.01 per litre for diesel amid market rallies across both major oil benchmarks.
Prices have since eased, but remain historically elevated at 170.05 per litre for unleaded and 183.19 per litre for diesel.
Asda currently runs 320 petrol stations across the UK, and was taken over by brothers Mohsin and Zuber Issa and TDR Capital last year.
They acquired the supermarket chain from US giant Walmart in a £6.8bn deal.
Asda agreed to sell 27 of its forecourts in order to secure the acquisition following competition concerns by the regulator.
The Issa brothers own a filling station empire and there was concern Asda’s forecourts would be rolled into it.
Meanwhile, Co-op has been keen to free up cash, having announced earlier this summer it would have to cut around 400 jobs in the face of tough trading conditions worsened by rising inflation.
The group has offloaded a number of its divisions over the past decade, including its chain of pharmacies and travel shops.