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Marks tells of his four-year battle to land Somerfield

November 21 2008

Co-operative Group Chief Executive Peter Marks has revealed that the ground-breaking ruling by the Office of Fair Trading not to refer the society’s £1.565 billion bid for Somerfield to the Competition Commission was a “knife-edge decision”.

Addressing the Group’s half-yearly meeting in Manchester, Mr Marks admitted that the regulatory body had been “very concerned” about local competition issues and said that the 126 stores the society had agreed to dispose of to clinch the purchase represented the biggest sell-off in the OFT’s history.

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Said Mr Marks: “It’s a very complex, very difficult road that we’ve travelled. Financial Director Martin Waites and I have been looking at Somerfield for four years now. In our roles within United Co-operatives, we came very close to bidding for this business three or four years ago. It wasn’t right for us then but we told our Board then that this would come back to the market and so it did. That’s nine months ago.”

Mr Marks praised the role of his executive team, Chair Len Wardle, and the Group Board, for helping to bring the deal to fruition. Mr Waites was singled out for particular praise. “The fact that Martin has managed to raise the funds in this marketplace to do this deal is a magnificent effort, but it’s also testament to what the banks feel about the quality of this deal and it gives me, and I know it gives our Board, confidence that this deal is absolutely right for us,” said Mr Marks.

He went on: “This was a really big decision, the biggest decision our Board has ever made. The directors looked at this with absolute rigour and were very challenging to me and my team. But, because of that rigour, we were all — everyone in the Boardroom and in the management team — as one when we decided that this was the right thing to do.”

The Chief Executive said someone had asked him recently if the Somerfield acquisition was the right thing to do in the current economic climate, but replied that it was absolutely the correct move at this time.

Explained Mr Marks: “This is more important now than it ever has been. This is a transformational deal for this organisation and takes the Co-operative back to being what I call a Premiership food retailer, where it was when I started in this business 40 years ago.

“We can pass on much of the savings that we’ll make by bringing Somerfield and the Group together to our customers by a better price proposition. We need to do that — especially in the climate we have at present.”

Mr Marks predicted that, with over 120 stores to be divested to satisfy the OFT’s concerns, it will be late February before the Group is handed the keys to the Somerfield chain. “There’s still much work to do but we’ve made great progress and we look forward to getting those keys and creating a fifth new player in the food retail market,” he said.

Mr Marks also took time to congratulate the Board and management of Lothian, Borders & Angus Society for their decision to seek to amalgamate with the Group.

“This is a very strong society that didn’t need to merge for financial reasons, but they share my vision that being together as one is much stronger than being separate and I take my hat off to them.”

Concluded Mr Marks; “We are going through troubled times and I can understand if members are frightened by some of the press headlines. They are frightening!

“But we have a management team and a Board of directors that have seen this business go through the bad times as well as the good. We have we a management team and a Board that is resilient, that will get their sleeves rolled up and tackle anything the economy will throw at us over the next couple of years.

“I’m absolutely confident that the Group and the Movement will come through this recession stronger and fitter for the future.”

Category: Retail Societies

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