Morrisons guards McColl’s by employing 16,000 employees.
Morrisons has won a court battle to save McColl’s, the convenience store and newsagent business, and has hired all 16,000 employees.
Morrisons outbid EG Group, the petrol station conglomerate controlled by the rich Issa brothers.
Morrisons will pay off McColl’s £170 million debts and take over its 1,160 stores and 2,000 members’ pension schemes.
The supermarket’s CEO said the agreement provided stability and continuity for the company, its employees, and retirees.
PwC put McColl’s into administration on Monday, and Morrisons bought it right away.
The agreement gave “much needed clarity to McColl’s 16,000 employees following a time of genuine stress,” said to Rob Lewis, joint administrator and partner at PwC.
The danger of McColl’s entering into administration has sparked fears that if a buyer could not be found, store closures and job losses may occur across the UK.
Morrisons’ first offer was rejected, and the Issa brothers appeared to be on the verge of sealing the purchase.
The companies competed over the weekend, with Morrisons’ winning bid included the settlement of McColl’s debts.
“Although we are disappointed that the business has been placed into administration, we believe this is a healthy resolution for McColl’s and all its stakeholders,” Morrisons CEO David Potts said.
This acquisition provides stability and continuity for McColl’s business, as well as a better conclusion for McColl’s employees and retirees.”
Competitive bidding
McColl’s ran into difficulty when it tried to upgrade its product line and ran into Covid-related supply chain issues.
When it was revealed last week that the convenience store chain was on the verge of bankruptcy, a bidding war erupted.
Morrisons already had a relationship with McColl’s because it sells merchandise to its convenience stores.
It’s also partnered with Morrisons Daily to transform hundreds of McColl’s outlets into Morrisons Daily convenience stores. More than 200 are now operational, and they are working admirably.
Meanwhile, the Issa brothers run Asda and their EG Group operates thousands of petrol stations and convenience stores across the UK, Ireland, Europe, Australia, and the United States.
On Sunday, Morrisons and EG Group submitted their final bids for the company.
Questions about what would happen to McColl’s two defined benefit pension schemes surfaced as the company’s existence hung in the balance. Morrisons’ proposal was successful in the end because both bidders committed to support the pension funds.
“The trustees will continue to interact with all stakeholders following the closure of the acquisition to ensure that members’ benefits are maintained,” a spokesman for McColl’s Pension Schemes stated.
