And then there were five...

The big six has just become the big five as supermarket group Somerfield gets bought by a rival…

This deal has been expected for a long time in the grocery supermarket sector, and this morning it finally happened. The Co-op (the UK’s fifth largest supermarket group) has bought Somerfield from its venture capital owners. A good case study to use with A2 students looking at business strategy, with the neat twist of the competition authorities requiring the Co-op to sell a proportion of its new Somerfield stores in order to avoid local market domination. The branding issue (Somerfield’s name will disappear) also raises some good marketing questions.

Key points of the deal:

- Co-op paying £1.6bn to 880 Somerfield stores
- The Co-op will rebrand all the stores it keeps
- About 100 stores will have to be sold to other supermarkets in order to meet the concerns of the Office of Fair Trading (i.e. where the Co-op would have too high a market share by owning the acquired and existing stores)
- Co-op will have 3,000 stores, sales of £8bn and a market share of around 8%
- Acquisition cements Co-op’s position as the UK’s fifth largest supermarket group