The Co-op Group has made an audacious knockdown bid to take over Costcutter, one of Britain’s biggest independent grocery retailers, amid an accelerating shake-up of the food industry.
Sky News has learnt that the Co-op, which has been revived after nearly collapsing five years ago, approached Costcutter’s owner, Bibby Line Group, with a £15m offer several weeks ago.
The bid was rejected, but Bibby Line is understood to have left the door open to further talks.
“The talks are not live, but could be again very soon,” one source said on Saturday.
Disclosure of the approach from the Co-op could pave the way for offers from other suitors, according to retail analysts.
One source said this weekend that Bibby Line, a conglomerate with interests in construction equipment hire, financial services and shipping, was prepared to consider offers worth at least £50m.
It was unclear whether the gap between that figure and the Co-op’s offer would be bridged.
A full takeover by the Co-op, Britain’s biggest diversified mutual, would create a retail business with well over 4,000 stores.
The Co-op is the fifth-largest player in the food retailing market, trading from more than 2,500 shops.
In May, it took control of Nisa Retail following a takeover battle in which J Sainsbury had also shown interest.
Costcutter has been expected to combine with another major grocer for some time, with anticipation of such a move heightened after Tesco announced the £3.7bn takeover of wholesaler Booker 18 months ago.
The Co-op is a natural suitor for Costcutter, with the pair having struck a wholesale supply agreement last November in the wake of Palmer & Harvey (P&H), another big wholesaler, collapsing into administration.
Under the existing deal, Costcutter is supplied exclusively by the Co-op, for which it pays roughly £500m annually.
The Costcutter Supermarkets Group is one of the largest so-called symbol retailers in the UK, helping independent grocers with buying, marketing, retail and technology.
Its brands include Mace, Simply Fresh and Supershop, and it now has about 1800 shops within the group, down from about 2200 at the time that P&H collapsed, causing acute but temporary supply issues.
Expectations of a further shake-up in grocery supply have been fuelled further by the proposed £15bn merger of Asda and J Sainsbury.
That tie-up, which will face stiff scrutiny from the competition watchdog, has sparked concerns among suppliers because of the chains’ commitment to finding hundreds of millions of pounds in annual savings.
Sainsbury’s, which holds its annual meeting next week, is said to be on the verge of naming a successor to David Tyler, its chairman.
The accelerating consolidation in the industry has triggered concerns from MPs about the impact on suppliers and workers at a time when jobs in the retail sector are being lost at a frightening pace because of the number of chains being forced into bankruptcy or store closures.
Sir Michael Bibby, who recently handed over the reins of his family-owned conglomerate, had told Costcutter members last summer that a deal involving the retailer was imminent.
His successor at the helm of the company is John Cresswell, the former chief executive of communications infrastructure group Arqiva and a one-time ITV executive.
Mr Cresswell’s appointment came within months of Bibby Line Group reporting its first annual loss for three decades, largely driven by problems in its oil and gas-focused offshore division.
The Co-op declined to comment this weekend, while Bibby Line could not be reached for comment.
From – SkyNews