Morrisons in agreement with Asda to acquire additional selling space via acquisition of 16 former Netto UK stores

Morrisons announced it has entered into a conditional agreement with Asda to acquire 120,000 square feet of additional selling space through the purchase of 16 former Netto UK stores at a cost of £28.1 million. These stores will fit very well into Morrisons’ portfolio of 437 existing stores, said the firm.  The additional selling space is incremental to the 500,000 square feet target already outlined by the firm for 2011/12.

Obtaining the stores is conditional upon the successful completion of Asda’s acquisition of Netto UK with final approval by the Office of Fair Trading. The handover of the stores is expected to take place on a phased basis commencing in March, with completion of the conversion to the Morrisons format expected to take three months.

Dalton Philips, Chief Executive of Morrisons, commented that these additional stores are an important next step in Morrisons’ growth.  He reiterated that the retailer is building on its strategy to bring Morrisons’ unique offer of freshly prepared, affordable food to more people in Britain. Under the terms of the agreement, Netto staff will be absorbed into Morrisons.

In its release, Netto announced that Subject to final Office of Fair Trading (OFT) approval, 147 Netto stores in the UK will be converted to Asda Supermarkets by late autumn 2011. All newly converted Netto stores will charge same low price as every other Asda in UK, with fresh food range to double in size. Further to that, the number of products will rise from an average 1,800 up to 10,000, enabling customers to complete a full weekly shop, said Netto.

The stores will trade under the Asda Supermarkets banner and will average 8,000sq ft in size. The retailer has said that customers will be able to complete a full weekly shop in each store. Asda intends to make sure prices in these smaller stores are identical to those Asda shoppers benefit from elsewhere.

Judith McKenna, Asda chief financial officer, who led the deal, noted that the investment marks a key development in the firm’s plan to bring Asda to more customers in many more communities across the UK. She reiterated her delight that the firm is one step closer to completing its acquisition of the Netto stores, which will allow it to provide even more space, choice and savings to its millions of customers in the UK.

13 Jan 2011.