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Britain's largest co-operative societies agree to merger

The boards of Britain's two largest co-operative societies agreed yesterday to a merger that will form the world's largest consumer co-operative group with sales in excess of £9bn. A combination of the Co-op Group and United Co-operatives would be the largest merger of a consumer-owned mutual retailer since the modern co-operative movement was founded in Rochdale in 1844. It will create a business with a turnover greater than Sainsbury's, the country's third largest supermarket. The boards of Manchester-based Co-operative Group and Rochdale's UniteCo-operatives have given their approval to the plans. They are recommending that their members back the deal. Members of the two societies will meet in April and May to consider the proposal and, if agreed, the new society is expected to come into being in late July. The enlarged group would have a turnover of around £9bn and account for more than 80 per cent of co-operative retail trade in the UK. It would operate from more than 4,500 sites stretching from Cornwall to the Scottish Islands, with particular strength in the north of England and the north Midlands. Its businesses would range from food retailers and financial services to funeral parlours, pharmacies, car dealerships and footwear. A spokesman for the Co-operative Group said it was too early to say if the merger would result in any job losses. The two groups currently employ around 87,500 staff. The Co-operative Group is the country's largest co-op with 3.5 million members, while United has 930,000 members. However, job losses are expected, especially after the raft of redundancies triggered by previous mergers. Most recently a merger of the Co-operative Financial Services arm with the retail group was coupled with the departure of several hundred financial sales staff. The boards are expected to focus on the more positive aspects of the deal, which they hope will allow the group to catch up with supermarket rivals Sainsbury's and Morrisons. There are already crossovers between the two groups, with United stocking its shelves with products made by the Co-operative Group, while both jointly run the online E-Store. There are around 35 co-operative groups in the UK, including small scale set-ups such as The Penrith Co-operative Society, which runs nine small supermarkets in Cumbria and County Durham. The two boards also announced that the new society's trading group would be headed by Peter Marks, the current chief executive of United Co-operatives. Mr Marks said today: "The business case for merger is overwhelming." United and Co-op Group already enjoy many of the benefits that a combination would bring, particularly through their involvement in the Co-operative Retail Trading Group, which acts as a buying agent for about 95% of the co-operative movement. A merger is expected to allow the enlarged society to better orchestrate the way the brand is marketed. In 2000, the Co-operative Wholesale Society and the Co-operative Retail Society merged and in 2002 it changed its name to the Co-operative Group.Many of its senior staff have Yorkshire connections, including Bradford-born Mr Marks, who was chief executive of the Yorkshire Society, which is now part of United, at the time of the merger. Members of Sheffield Co-operative Society and Leeds Co-operative Society both recently voted to merge with United.

 

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