Food groups Morrisons and the Co-op are expected to be at the forefront of acquisition interest in organic food home delivery specialist Abel & Cole, which is being put up for sale.
New chief executive Dalton Philips is keen to rectify that, but has not yet decided whether to buy a business or build one from scratch.
Although Morrisons is understood to have looked at Abel & Cole in the past, a source at the big grocer downplayed speculation that it would be at the front of the queue when a formal sale process gets under way.
But other sources familiar with developments said there is clear logic in a tie-up because of Abel & Cole’s infrastructure, product opportunity resulting from Morrisons’ ownership of farms and the chance to tap into a Waitrose-style customer base. “The expectation is that they’ll talk,” a source said.
Co-op, the fifth biggest food group following the acquisition of Somerfield, also has no online food operation and is likely to find Abel & Cole’s ethical stance and focus on food provenance attractive.
Abel & Cole, which operates from Manchester southwards, is understood to have generated a 25% sales uplift over Christmas. Last year the retailer made a profit of £4.2m. PwC has been appointed to handle a sale. Morrisons and Co-op declined to comment.