Asda has snapped up the Co-op's petrol stations business for £600mln including cash and leases.
The UK's third-largest supermarket group, which was bought by billionaire petrol station moguls the Issa brothers two years ago, will shell out a cash value of £438mln for the sites. The total enterprise value includes lease liabilities of around £162mln.
For that price, it is getting 132 sites, of which 129 have forecourt retail businesses and three offer development opportunities.
The stores being acquired generated net sales of £863mln in the 12 months to June 2022.
Asda said the stores will "create a new and distinct format" for the chain in the convenience market.
Asda co-owner Mohsin Issa said: “We have always been clear in our ambition to grow Asda and are hugely excited to create this new and distinct part of our business, giving us the opportunity to bring Asda value in fuel and groceries to even more customers and communities across the UK.
“We see convenience as a significant growth opportunity for the business. This acquisition accelerates our strategy in this area and forms part of our long-term ambition to become the UK’s second-largest supermarket."
Currently Asda has a 13.9% share of the UK grocery market, according to the latest data from Kantar, while second-placed J Sainsbury PLC (LSE:SBRY) has 14.8%.
Co-op said the sale was of a "non-core" business and would enable it to focus on its "core convenience proposition whilst significantly deleveraging and strengthening the group's balance sheet".
In addition to reducing debt, it plans to use the proceeds to reinvest into its retail estate, as well as its growing wholesale, franchise and e-commerce operations, including new convenience stores, technology and logistics.
Shirine Khoury-Haq, Co-op's new chief executive, said it was "in line with our strategy to move away from operating petrol forecourts and supports our vision of Co-operating for a fairer world while building our core leading convenience business".
The transaction is due to complete in Q4 2022.