Sainsbury’s has agreed to acquire 14 stores from Morrisons comprising 13 Safeway branded stores and one Morrisons store. The average store size is 30,000 sq ft.
Justin King, Sainsbury’s Chief Executive said, “When we announced the sale of Shaw’s, our US supermarket business on March 26th 2004, we indicated that we would use a proportion of the funds generated to develop further Sainsbury’s core UK supermarkets business to strengthen our market position and deliver future growth.
“These stores from Morrisons give us a great opportunity to increase our selling space in the UK by over 400,000 sq ft, a little under 3%. Such opportunities have become increasingly rare and we are delighted to secure these stores and look forward to introducing Sainsbury’s products and services to new areas and customers. We also look forward to welcoming 2,600 new colleagues to Sainsbury’s.”
The stores are located primarily in the Midlands and the north of England and had a net book value of £110m at September 2003.
In accordance with the process set out by the Competition Commission in its report on the Safeway merger, each store acquisition is conditional upon approval from the OFT. The stores acquisition is expected to complete in phases over the summer.
In a separate transaction Sainsbury’s has also acquired a 16,500 sq ft store from Somerfield in Bridgnorth, Shropshire; this completed on 23rd April.
It is anticipated that the acquisition of these stores from Morrisons and Somerfield will be earnings neutral in 2004/05, reflecting the timing of their openings and earnings enhancing in their first full year of operation.
