Co-op claims financing for Somerfield

The Co-op said that it had secured £1.5bn (US$3bn) of financial backing for its possible bid for Somerfield, the supermarket currently owned by a consortium including Apax, Robert Tchenguiz and Barclays Capital.

Co-op chief executive Peter Marks confirmed that he was serious about making a bid for the company. Somerfield has proved a tricky business to sell in the current environment. Financial buyers are unable to raise significant sums of debt and rival supermarkets are unable to make an offer because of competition reasons.

Marks added that he wanted to double the chain’s profits within three years, partly through making acquisitions. He told the Financial Times that “Somerfield has a very similar business to ours and it makes a lot of sense for us financially and operationally.”

Some have speculated that the Co-op would have to sell some of Somerfield’s stores to obtain regulatory clearance and defray the expense of the purchase. The bid for the whole chain is expected to be at £1.7bn.