The Co-op is in talks to offload its forecourts business for about £450m to cut debt and improve its balance sheet.
Discussions about the sale of the 130-branch business are at an advanced stage, Sky News reported. The broadcaster subsequently said that Asda is the leading contender and a deal could be struck this week.
If it goes ahead, the purchase would put Asda on a stronger footing to battle rivals such as Sainsbury’s and Tesco in the convenience market.
The disposal comes at a difficult time for the Co-op, which revealed in July that it would cut 400 head office jobs amid a tough trading environment.
The Co-op, which last week confirmed the promotion of Shirine Khoury-Haq to become chief executive, is determined to cut its borrowings and strengthen its financial position as consumers suffer a cost-of-living crisis.
Disposal of the forecourts division would be the latest restructuring of the group, which refocused after a scandal rocked the Co-operative bank that it formerly owned and threatened the future of the entire business.
Forecourts have become an increasing area of focus for retailers and others have looked at the possibility of selling in recent months. However, according to Sky, an auction of Motor Fuel Group is unlikely to go ahead at present because of difficult debt financing markets.
The Co-op did not comment on the talks about the potential forecourts sale.
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