Grocer Morrisons has concluded the sale of its forecourts business to specialist operator MFG.
The deal, taking in 337 Morrisons’ petrol forecourts and approximately 400 associated sites on Morrisons’ car parks, has a price tag of £2.5bn in cash and equity instruments.
The completion of the deal initiates a “new strategic partnership” between Morrisons and MFG.
Morrisons has taken a 20% stake in MFG and struck commercial and supply agreements. The grocer said the deal underpins its convenience growth strategy.
Both companies are owned by private equity group CD&R. Morrisons is carrying a high level of debt following its acquisition three years ago and willl use the cash proceeds from the forecourts sale – amounting to £1.8bn after fees and expenses – to “strengthen its capital structure and repay certain of its debt obligations”.
The retailer said: “While the company may elect to apply up to £1bn proceeds towards reinvestment, it intends to explore if there are efficient opportunities to apply proceeds to debt reduction.” A ‘Facility A’ loan under Morrisons’ senior facilities agreement will be repaid “in its entirety without delay”.
Morrisons, which had been underperforming its rivals, last month reported its strongest quarterly like-for-like sales in three years under new chief executive Rami Baitiéh’s programme to “reinvigorate, refresh and strengthen” the business.
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