Morrisons has confirmed it will save McColl’s from collapse, after an agreement with its administrator.
Thousands of jobs were left hanging in the balance as McColl’s teetered on the brink of collapse last week.
However, now grocer Morrisons has confirmed it will snap up the convenience store operator through a pre-pack administration.
The Clayton, Dubilier & Rice-owned supermarket chain will acquire all of McColl’s 1,160 stores, including 270 Morrisons Daily format stores, it confirmed.
All 16,000 McColl’s workers will continue to work for the business while McColl’s two pension schemes will be taken on by the grocer.
Within the agreement, McColl’s secured lenders and preferential creditors will be paid in full with a distribution also expected to unsecured creditors, it was confirmed on Monday afternoon.
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,” the supermarket boss added.
The news was welcomed by the McColl’s pension schemes. “The trustees will continue to engage with all stakeholders to ensure that members’ benefits are protected following the completion of the transaction,” a spokesperson added.
Morrisons fended off an eleventh hour takeover offer from the billionaire Issa brothers’ EG Group.
The petrol station operator confirmed it had been interested in saving McColl’s and said its proposal would have protected all 16,000 jobs, as well as boosting pay of all hourly-paid staff to £10.05 for adult workers.
“EG also hopes the announcement will bring to an end the uncertainty for the hard-working colleagues at McColl’s and wishes them the best for the future,” a spokesperson for EG Group added.
City law firm Ashurst said it was advising Morrisons on the agreement, the second major transaction since Morrisons’ £7.3bn takeover by US private equity firm CD&R.
Retail union Usdaw welcomed news of the rescue deal and national officer Joanne McGuinness said it was a “huge relief for the staff.”
“McColl’s was a non-unionised business, which meant their staff had no real voice in the future of the business. Usdaw has a long-standing and productive relationship with Morrisons and we will be looking to extend trade union representation to all staff in McColl’s,” she added.