Morrisons has triumphed over EG Groups in its ambition to take on the faltering McColl's convenience store business after a weekend struggle.
All of McColl's employees will keep their positions while the company's stores are transferred to the new owner, and Morrisons will take over the company's two pension plans.
The convenience store business went bankrupt on Friday 6 May, putting the futures of its 1,160 stores and 16,000 employees in jeopardy.
McColl’s had been in talks with potential lenders to help strengthen the company, which struggled during the pandemic due to supply chain challenges, inflation and a large debt load.
But talks with lenders broke down after creditors refused to extend a deadline for the company to find additional funds.
However, in another twist in the tale, the convenience chain .
Here is everything you need to know about it.
What is McColl’s?
The McColl's Retail Group is a British convenience store and newsagent chain that operates under the names Morrisons Daily and McColl's (for its convenience stores), Martin's (for its newsagents and pound shops) and RS McColl in Scotland.
It was founded in Glasgow in 1901, and serves around five million people per week, according to its website.
Morrisons and McColl’s are major partners, with McColl’s operating hundreds of convenience shops under the Morrisons Daily brand.
Kevin Mountford, savings expert and co-founder of Raisin UK, said: “It makes total sense for Morrisons to fight to save McColls. McColl’s also trades under the name Morrisons Daily, which is Morrisons answer to Tesco Express, which has helped Tesco see huge profits.
“With McColls facing administration, Morrisons was once again at risk of losing their convenience store formats, which was going to be a huge concern for Morrisons’ new owners as Morrisons Daily was performing well compared to McColl’s original brand.”
Why is it struggling?
McColl's was "caught in a difficult place, particularly with Covid-19," Teresa Wickham, a former director of Safeway, told the BBC's Today programme.
She said the pandemic struck at a time when the company was transitioning from typical convenience stores to offering more fresh fruit through its alliance with supermarket Morrisons.
Wickham said that stores that had done this had performed well because shopping habits shifted to buying more local produce during the coronavirus crisis, but the chain lacked investment and only a small percentage of its stores made the switch.
In 2021, McColl's was also accused by the government of not paying some of its employees the UK minimum wage.
It claimed the underpayments were due to historical errors and that employees had been promptly reimbursed, but was ordered to repay the money as well as a £3.2 million fine for violations such as deducting pay from wages for uniforms and expenses, or failing to pay the correct apprenticeship rate.
Has it gone bust?
The convenience store business went bankrupt on Friday, putting the futures of its 1,160 stores and 16,000 employees in jeopardy.
It was anticipated to formally enter administration on 9 May, but the eleventh-hour rescue deal from Morrison’s has saved it.
The decision came after a battle over the future of one of the London's stock market’s most negatively regarded companies, whose shares had fallen from a £200 million price to next to nothing.
Shares were suspended on Friday 6 May.
What happens next?
EG, whose owners also operate supermarket giant Asda, had been initially tipped to confirm a McColl's rescue plan.
Early proposals by Morrisons were reportedly rebuffed by lenders, who preferred EG's offer to immediately cover more than £160 million in McColl's obligations.
But Morrisons is expected to repay the lenders in cash as a result of its successful move.
Morrisons had planned to save only the "vast majority" of jobs and stores at first, but this offer was improved during the bidding process.
“All McColl’s colleagues will be transferred with the McColl’s business to Morrisons,” the supermarket said.
Morrisons will buy McColl's once it enters insolvency proceedings overseen by professional services firm, PricewaterhouseCoopers (PwC).
On Friday evening, EG Group looked to have wrapped up a deal to buy McColl's, despite its stance on the company's two pension plans drawing political attention.
A sale to EG was also expected to cause a short-term disruption in supply for McColl's stores, as Morrison’s wsa expected to cancel its wholesale supply partner agreement had its offer not been accepted.
Morrisons' offer is said to include a promise to pay the lowest-paid employees £10 per hour.
Mountford described the deal as “brilliant news for communities”, with jobs protected and local convenience stores remaining open.