Morrisons set to win race to rescue McColl's

Morrisons now looks set to clinch a last ditch deal to buy the convenience store chain McColl's.

The supermarket has been in a two-way battle with EG Group, the Blackburn-based petrol station empire owned by the billionaire Issa brothers.

McColl's is poised to go into administration, but in what's known as a pre-pack deal the business will immediately be sold to a new owner.

McColl's has more than a thousand small stores and 16,000 workers.

No formal announcement has been made but it is understood that Morrisons has secured the winning bid.

Morrisons is McColl's key wholesale supplier. It has also formed a tie-up with the chain to convert hundreds of McColl's shops to Morrisons Daily convenience stores. There are already more than 200 operating, and these have been performing well.

It emerged last week however that the convenience chain store as a whole was in trouble and close to collapse. That led to a tit-for-tat bidding war over the weekend. Both Morrisons and EG Group filed final offers for the business on Sunday.

Key to securing the winning bid has been a willingness to repay McColl's banks around £170m, as well as taking on responsibility for the company's pension scheme which has 2,000 members.

The trustees of the McColl's pension schemes have written to the Business Secretary, Kwasi Kwarteng, urging him to do whatever he can to make sure pension scheme members are protected.

The convenience store sector as a whole has done relatively well during the pandemic, as people shopped closer to home.

However, McColl's has run into difficulties as it attempted to update the range of food it sold, a process made harder by Covid-related supply chain problems.

Morrisons and EG Group have declined to comment.