The group is conducting due diligence on Somerfield and is understood to have submitted a provisional bid of about£1.7 billion for the 900-store local grocery chain. However, Marks declined to comment on details, such as price or store disposal numbers.
He said: “There is a lot of work to do,” such as negotiating a price and carrying out due diligence. “We would hope to bring this to a conclusion by the summer of this year,” said Marks. Somerfield’s owners are thought to be holding out for a higher price, although they are believed to be willing to accept less than£2 billion.
If the bid is accepted, it is understood that the deal could be completed as early as June. The Co-op’s interest in acquiring Somerfield was first revealed by Retail Week (January 11).
Marks said: “It [Somerfield] is a great strategic fit.” If the Co-op acquired Somerfield, it would increase its market share to about 8 per cent. Somerfield has a 3.6 per cent market share and the UK Co-ops combined have 4.4 per cent.
For the 52 weeks to January 12, Co-operative Group’s trading group operating profit – before significant items and changes in the valuation of investment properties – rose 35.2 per cent to£322.7 million.
Performance was driven by a strong contribution from food. The period includes six months of figures from United Co-operatives, which Co-operative Group merged with last summer.
The Co-operative’s food division’s sales rose 21 per cent to£3.68 billion and pre-tax profits increased 50.5 per cent to a record£139.2 million.
Marks said: “There is no doubt we had a great year in food. It has continued into the first quarter of this year and like-for-likes have been very strong in food.”
He said like-for-like sales had been “in excess of 4 per cent” since January 12.